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MARSHALL’S 


Corporation and Voucher 

Accounting 



BY 

CARL C. MARSHALL, 

Author of "Bookkeeping and Business Training," and joint author of the 
Ellis "Learning by Doing" Series. 



CEDAR RAPIDS, IOWA: 
GOODYEAR -MARSHALL PUBLISHING CO. 
1907. 


Copyright 1901 

GOODYEAR-MARSHALL PUBLISHING COMPANY 


Marshall’s Corporation and Voucher 

Accounting. 


CORPORATIONS. 

A Corporation is an organization of persons, specially authorized by law to act as 
one person. Corporations have certain general powers, rights, and responsibilities which are 
specified by the law under which the corporation is created. 

A Charter is a formal document issued by the proper authority, setting forth the 
power, purposes, and term of existence of a corporation, and by the issuance of which the 
corporation attains to a legal existence. 

Classification — Corporations are either Public or Private. Public corporations in- 
clude the persons of an entire community, as a city, or town, and are formed for govern- 
mental purposes. Private corporations are those formed by the voluntary association of in- 
dividuals, and include all corporations not public. 

Private corporations are further classified into : — 

1. Religious, or those comprising churches or other religious societies. 

2. Benevolent, or those formed for promoting educational, charitable or fraternal un- 
dertakings, as colleges, fraternal societies, hospitals, etc. 

3. Commercial, or those organized for pecuniary gain, as the various companies 
formed for manufacturing, trade, transportation, and other business purposes. Commercial 
corporations are often spoken of as joint stock companies. 

We limit our attention here to commercial corporations, or companies. The powers, 
privileges and obligations of these organizations, vary considerably in the different states, 
and it is always necessary for those who form commercial corporations to consult carefully 
the state or national laws under which the proposed company is to be organized. 

ihe StocR of a commercial corporation is the money or other capital which it is pro- 
posed to invest in the concern, and which is represented by a certain number of shares, usual- 
ly of the denomination of $25, S50, or $100 each- An agreement to take or subscribe for 
these shares constitutes the first formal step in the organization of a corporation. 

Procedure in the Organization of a Commercial Corporation. 

Preliminary Discussion, Promotion, Etc. — A corporation may be orig- 
inated as an entirely new business enterprise, or it may be formed in order to make more ef- 
fective a business already established as a partnership, or single proprietorship. Corpor- 
ations are also frequently formed to combine a number of existing corporations, or other bus- 
iness concerns into a single company. Combinations of this kind, are frequently, but improp- 
erly spoken of as “trusts.” 

Ihe first step in the formation of a corporation, is an informal discussion among the 
proposed incorporators, as to the advisability of forming the company. Frequently the forma- 
tion of a corporation is brought about through the efforts of some individual, who makes it 
his business to induce others to join in organizing the company. The business of bringing 
about the organization of companies in this way is called “promoting,” and the person who 
accomplishes it is known as a “promoter.” The promoter of a corporation, usually receives a 
certain per cent of the stock as compensation for his services. 


2 


CORPORATION AND VOUCHER ACCOUNTING. 


Minutes of Meetings. When the persons interested in the proposed corporation 
meet to discuss plans of organization, etc., a preliminary organization is usually effected, a 
temporary chaiiman and secretary being chosen. The secretary should prepare minutes of 
the meetings which are recorded in the “Minute Book.” Any common blank book may be 
used for this purpose. If subsequent meetings are held, the minutes of the previous meeting- 
should be read by the secretary, and, if no corrections are required, they are duly “Ap- 
proved” and are signed by the president and the secretary. 

An illustration of the minutes of a corporation meeting will be found on page 9 

Stock Subscription Agreement. The first formal and legal step in the or- 
ganization of a commercial corporation, consists in the signing of the Stock Subscription 
Agreement by the proposed incorporators. This comprises a mutually binding contract on the 
part of the several signers to take and pay for the shares of stock which each subscribes for 
If the company is to be composed of many stockholders, a special book called a Stock Sub- 
scription Book may be used for this purpose, but more often the agreement is in the form of 
an ordinary legal document, which, when signed and witnessed (usually by a Notary Pub- 
lic) is filed in the secretary’s office. (See form of Stock Subscription Agreement on pa°- e 
9.) It is not necessary for the entire amount of capital stock to be subscribed before the cor- 
poiation is formally organized. This may be done whenever, in the judgment of the incor- 
porators, sufficient stock has been subscribed to insure the success of the company. 

Adoption of Articles of Incorporation. When a sufficient amount of 
stock has been subscribed, the incorporators hold a meeting, and proceed to perfect the or- 
ganization of the company. This consists in the adoption of Articles of Incorporation These 
should set forth : — 

1. The official name of the corporation. 

2. The purpose for which it is formed. 

3. The period of time for which it is organized. 

4. Its location, or place where its principal business is to be transacted. 

5. The amount of capital stock and the number of shares into which this is to be di- 
vided. 

6. The names of the officers and directors elected for the first official term. 

7. The names of the incorporators, whose signatures are duly attested by a notary pub- 
lic, or other competent officer. 

Other provisions may be added, as those relating to the duties and powers of the of- 
ficers, the amount of indebtedness the corporation may incur, or any other general regula- 
tions of the corporation affairs which may be deemed advisable and which are not in conflict 
with the laws of the state in which the corporation is organized. 

The form on page 10 affords a fair illustration of Articles of Incorporation as usually 
adopted, but it should be remembered that these forms are subject to much variation. 

When Articles of Incorporation have been duly adopted, and signed by the incorpor- 
ators, and the signatures duly certified to by a notary public or other competent official the 
instrument is forwarded, with the required fee, to the office of the Secretary of State, where 
it is officially recorded, and the original copy, duly certified, is returned to the officers of the 
company, and becomes in the contemplation of the law, the charter, by the issue of which the 
corporation attains to a legal existence, and becomes competent to transact business under 
its corporate name. 

Powers and Liabilities. 

The powers, duties, rights, and limitations of corporations and of the individuals who 
compose them, are subject to considerable variation in the several states. Within the limns 
of the constitution, each state regulates corporations in its own way, and the student of 
these organizations should begin by studying the special laws of his own state, which pro- 
vide the conditions and limitations under which they may be organized. Still, there are a 
number of general principles governing incoiporated concerns which are substantially the 
same in all the states. 


POWERS, EIABIRITIES, ETC. 


3 


Powers. Among the general powers and rights of corporations are the following : 
its charter C P ° WGr ° f P er P etual succession, or of corporate existence for the time named in 

2 ' r ’§ Pt to enter ’ nt0 contracts and to sue and be sued under the corporate name. 

3- e ri ? ht t0 acquire and dispose of real estate, patents, copy rights, or other prop- 
erty, the same as a natural person. & 1 1 

its officials^ 6 to P ossess anc * use a common seal for the certification of corporate acts by 

fl . ■5'. / PPe r '^ r * lt to ado P t su ch by-laws or other rules for its government, as are not in con- 
flict with its charter, or with the laws of the land. 

yotmg ^dE^c^tioHs.-^e directors and other officers of a corporation are 
usually elected annually. The voting is generally by ballot, each stockholder having a num- 
ber of votes equal to the number of his paid-up shares. 

Miist Keep Books.— Corporations are usually required to keep duly certified rec- 
ords of all official acts, also books of account showing all business transactions. These rec- 
ords are open to the inspection of all stockholders. 


Liabilities. Corporations, like individuals, are liable for the lawful acts of their 
agents, also for trespass or other wrongful acts committed by such agents or officers, when 
acting within their official authority. Corpoiations are also liable to their own stockholders 
for any infringements of their rights, occasioned through the acts of Corporation officers, 
when acting within their authority. The general liabilities of corporations vary consider- 
ably in the different states, being modified by the local laws. 

Liabilities of Stockholders — The individual liability of stockholders for the 
debts of the corporation depends upon: (i) The form of incorporation; (2) the class of 
stock held; (3) the provisions of the charter; and (4) the local statutes. With reference to 
individual liability, corporations have been divided into : 

1. Unlimited Liability Corporations, or those in which each stockholder is personally 
liable for all debts of the corporation. 

2. Single or Limited Liability Corporations, in which the individual stockholders are 
liable only to the amount of their unpaid stock subscriptions. 

3. Double Liability Corporations, in which the stockholders are liable to the full 
amount of the stock subscribed for. 

Note In some states, Limited Liability Corporations are required to affix the word “Limited” to their 
corporate name, whenever the same is publicly used. 


Corporation Finances. 

The piofits or losses of a corporation are apportioned among the stockholders according 
to the amount of capital stock respectively held by them. 

Dividends are distributions of profits, being designated as a certain percentage of 
the stock upon which the distribution is based. Thus, by a “six per cent dividend” is 
meant such a distribution of profits as will entitle each stockholder to an amount of profit 
equal to six per cent of the par value of the stock which he holds. 

Assessments are levies made upon stockholders, of a certain percentage of the 
stock held by them, the money thus raised being used for any legitimate purpose that may 
be decided upon by the management of the company. Assessments are usually made to 
cover deficiencies, or to meet expenses for which the available resources of the company are 
inadequate. 

•^ n Installment is a part payment of a stock subscription. Sometimes stock sub- 
scriptions are required to be paid in full at a specified date after the subscription is signed, 
and sometimes the subscriptions are paid in installments of a certain per cent of the par value 
of the stock. Frequently, paid-up stock is issued to certain of the stockholders of property 
transferred, or services rendered to the corporation. The time and manner of paying for 
stock subscription, is purely a matter of mutual contract among the stockholders. 


4 


CORPORATION AND VOUCHER ACCOUNTING. 


Classes of StocK. Not all the stock issued by a corporation assures the same 
rights, privileges, and profits to the persons to whom it is issued, and this variation in the 
conditions and limitations under which stock is issued, gives rise to several classes of stock, 
the more important of which are here designated as follows : — 

1. Common Stock . This is the ordinary stock that is subscribed for when a company 
is organized, and which is issued to the incorporators when paid for in accordance with the 
terms provided by the articles of incorporation. 

2. Treasury Stock. This is unissued stock that is reserved and held in the name of 
the company, as an asset to be disposed of as the exigencies of the business may require. 

3. Preferred Stock. In the organization of a company, it is often desirable to issue a 
portion of the stock under conditions that shall entitle it to a regular specified dividend 
which is to be paid out of any accruing profits — and which 'must be paid, before any divi- 
dends are apportioned to the common stock. The stock thus favored is known as “Preferred 
Stock” or “Preferential Shares.” If the stock is entitled to the dividend, whether or not 
any profits have been made, the amount being carried over from year to year, the total divi- 
dends for each year being finally paid when there are sufficient profits, the stock is known 
as “Cumulative Preferred” or “Guaranteed” stock. 

Preferred stock, however, is not entitled to any dividends in excess of the amount speci- 
fied, and for this reason, it comprises a more stable and less speculative investment than the 
ordinary stock, which, under some circumstances, may earn a very high rate of dividends 
and under others, none at all. 

4. Donated Stock. This is stock which is contributed pro rata by the several stock- 
holders, and to be sold for the purpose of raising needed funds to carry on the business. It 
is transferred to the company and held in reserve as an asset the same as Treasury Stock. 

Franchise. A franchise is any special privilege granted to a corporation by a mu- 
nicipal council or other law-making body. Franchises include such privileges as the right 
to use the streets of a city for a street car line, for water or gas pipes, telephone or electric 
lighting appliances, etc. A franchise is usually granted for a term of years, and is in the 
nature of a contract between the company receiving it and the municipality by which it is 
granted. 

Bonds. Bonds are the written or printed obligations of public or private corpor- 
ations, to pay specified sums of money, with interest on the same, in accordance with the 
terms named in the instrument. Bonds usually run for a term of years, the interest being 
payable quarterly or semi-annually, and represented on the instrument by detachable con 
pons, which are presented for payment as they mature. The bonds of private corporations 
are usually secured by mortgage, or other lien on the stock or other property of the corpor- 
ation. 

The Earnings of a company are the receipts derived from carrying on its business. 
Gross Earnings are the total receipts ; Net Earnings are the profits that are left after pay- 
ing all expenses. 

Securities. This is a general term for Bonds, Notes, Stocks, etc. When such se- 
curities are deposited as a basis for loans, they are known as Collateral, and the operation 
of thus depositing- them is known as Hypothecation. 

Fund. This term implies cash that is set apart as a reserve for any specific purpose, 
related to the business of a corporation. The cash belonging to a company or a municipality 
is often distributed, or classified into a number of funds, proportioned to the probable re- 
quirements of each, as the Contingency Fund, Reserve Fund, Salary Fund, Advertising 
Fund, Sinking Fund, etc. This method of disposal is sometimes a great aid in the systematic 
management of the corporation finances. 

Bonus. This is an amount either given or received by a corporation, on account of 
some special privilege growing out of its business. Thus, the people of a community may 
grant a bonus of cash or other property to a company in consideration of the general and 
public benefits arising from its establishment in the community as an industrial enterprise. 
On the other hand a corporation may pay a bonus to a city or town for the privileges con- 
ferred under its franchise. 


ORGANIZATION-BOOKS REQUIRED. 


S 


Corporation Accountancy. 

In their application to corporation affairs, the principles of bookkeeping are the same as 
those employed in other business undertakings. The laws of debit and credit are of course 
universal in their application, whether the business be conducted as an individual or ar corpor- 
ate proprietorship. 

But the peculiar relations sustained by the members of a corporation to the business it- 
self, the representation of the proprietorship interest by means of stock, and the method of 
apportioning losses and gains, gives rise to a number of accountancy requirements and meth- 
ods, that are not employed in individual or partnership concerns. 

With respect to bookkeeping requirements, corporations may be grouped into two gen- 
eral classes : — 

First, the so-called “close corporations,” or those in which the stock is permanently held 
by a few individuals, there being few changes in the personnel of the stockholders, and few 
or no transfers of stock. 

Second, the “open corporations,” or- those in which a considerable part of the stock is 
on the market, being commonly dealt in for speculative or investment purposes, there being 
a large number of stockholders, with frequent transfers of stock. Corporations of this class 
are, for the most part, heavily capitalized concerns, that do an extensive business, having 
their headquarters in some large city, with branch offices in ‘other parts of the country. 

Of these two classes of corporations, the smaller, or close corporations, are much the 
more common. They often consist of ordinary business partnerships that, for greater con- 
venience and stability of operation, have been re-organized in the form of corporations. 

For obvious reasons, the accountancy methods adapted to the use of this class of com- 
panies, are of more importance to the average student than are those special bopks and de- 
vices that are used only by the great concerns, that have their offices in the larger cities. 
For this reason, the scheme of corporation accountancy given in the present course has 
been selected with a view to illustrate the needs of ordinary incorporated concerns such as 
are to be found in nearly every business community, and with the usual bookkeeping meth- 
ods of which every student of accountancy needs to be familiar. 

The books and accounts required to be kept in a corporation business may be divided 
into two distinct groups : — 

1. The Corporation Books are those that relate to the stockholders as con- 
tributory proprietors and owners. These include the Installment Book, Stockholders’ 
Ledger, Installment Ledger, Assessment and Dividend Book, etc. 

2. The Operating Books are those that relate to the general mercantile or 
industrial operations of the company, as the J ournal, General Ledger, Cash Book, Sales 
Journal, etc., and which are kept in the same manner as though the business were not in- 
corporated. We shall first offer a general description of the Corporation Books, and their 
purpose, and afterward illustrate the use of these in the case of a suppositional corporation. 

At the outset, it is well to emphasize the fact that there is much variation among corpor- 
ations as to the form and kinds of books used. These will be determined by the nature 
of the business and the conditions under which the corporation is formed and conducted. 

Note — The corporation books described in the following pages, correspond to those that are to be used in 
conducting the affairs of the Central Canning and Drying Co., hereafter to be introduced, and should be care- 
fully studied. They will serve also to illustrate the methods of accounting usually employed by the majority 
of incorporated business concerns. 

Books Required for the Organization of a Corporation. 

If the corporation represents the inauguration of a new business enterprise, several 
books and forms will be required, that may not be needed in the case of a company whose 
business has been previously conducted as an individual proprietorship or a partnership. 
In the latter case, paid-up stock is likely to be issued to the several stockholders as soon as 
the incorporation is formed, and there may be no necessity for either a Stock Subscription 
Book, or any provision for installments. 

Assuming, however, the formation of a corporation for the establishment of a business, 


6 


CORPORATION AND VOUCHER ACCOUNTING. 


tmils'as'the canfiafm^ {I* ^ f bscribed and P aid for m installments at such 

timethe tattaSSis p^bS ^ * WO " Id be « «* 

, ,, In ^ tall “ent Book. In this book the stock subscribers are listed each time an in- 

-» s a “rs if 

Installment Certificate Book. This book consists of Installment Certifi- 
the e i a °n re f iptS for ,nstadment payments, which are issued to the stockholders at the time 

Thev T m ade ' 7 h t Se Ce , rtlflCates are often referred to as “installment scrip.” 

, y , transferable, and when the final installment is paid, are surrendered and stock cer- 
tificates are issued in their stead. See form on page 12. 

j_v The Installment Ledger is a book in which each stockholder is charged with 
RookT ° 'S s J ock , for whlcb he has subscribed (as shown by the Stock Subscription 

from\h“ Sok ,nSta “ men * S “ they “ e paid ' the hlter P«ted 

When the final installment is paid, the account is closed, the several installment certifi- 

o at rL^rm dered n a " d l St ° Ck ^ ertlficate for the ful1 amount of the subscription is issued 
to the stockholder, who is then credited in the Stockholders’ Ledger for this amount 

debited W “ mSta l lment certificate is transferred, the person to whom it is transferred is 
is credited * number of shares covered by the certificate, and the person transferring them 

The Installment Ledger is merely an auxiliary and temporary book, its purpose being 

0 give an exhibit of the various stockholders’ accounts preceding the payment in full of 
their several stock subscriptions. When the subscribed stock is all paid for, the Installment 
Ledger ceases to be active. It would not be needed at all unless the stock subscriptions are 
to be paid in a series of installments. See form on page 14. 

Cert *f icates - When the stock subscribed for by any subscriber is paid in 
lull, either by installments or otherwise, the secretary issues to him a Stock Certificate as 

fificate denCe ° f SUC1 payment ’ and of his le £ al ownership of the stock represented by the cer- 

The Stock Certificate Book contains the stock certificate blanks and corresponding stubs. 

1 hese certificates are issued to stockholders when the stock represented by them is fully paid 
up. they are issued in such denominations as the stockholder may wish, usually in “blocks” 
ot five, ten, twenty, or one hundred shares. See form on page 15. 

The Stockholders’ Ledger. 

This book contains a record of all shares issued to the several stockholders, also of the 
certificates surrendered, transferred, or re-issued. Its entries come from the Stock Certifi- 
cate Look, and it should always show the exact amount of stock that is controlled by the 
several stockholders. See page 16. y 

Transferring Stock. 

' ^ any ti “ e in the history of a corporation, it is likely that some of the prospective or 
actual stockholders may wish to transfer their interests, wholly or in part, to other parties. 
In fact, the right 6f a stockholder thus to transfer his interests, and without the consent of 
the other stockholders, is one of the principal distinctions between corporations and ordinary 
business partnerships. y 

A stockholder may not, however, by the transfer of his stock, escape his liability for any 
corporation debts that exist at the time the transfer is made. Neither may a subscriber for 
stock that is partially paid up, escape liability for the remainder of the subscription, by trans- 
ferring his Installment certificates. If the person to whom these certificates are transferred 
defaults m the payment of the remaining installments, the company retains the right to col- 
lect them from the original subscriber. 


TRANSFERRING STOCK. 


7 


The holder of either a stock or an installment certificate may transfer it by a proper 
and legally certified assignment, a form of which is usually printed on the back of the certifi- 
cate. 

Transferring Installment Certificates. When an installment certificate 
is transferred and the transferee presents it for record, the transferred certificate is cancelled 
(usually by writing across the face in red ink the word “transferred”) and re-attached to its 
original stub. A new certificate for the same amount is then issued to the transferee The 
person who made the transfer is then credited in the Installment Ledger for the amount of 
the stock tiansferred, and the account of the transferee is debited for the same amount. 

Should the holder of a certificate wish to transfer a portion of his holdings, and for an 
amount not represented by any certificate held by him, he first surrenders the certificate (or 
certificates) already issued, which is cancelled and re-attached to the original stub. Other cer- 
tificates are then issued equal in amount to the certificate surrendered, and of whatever de- 
nominations are desired. The subscriber is credited in the Installment Ledger for the cer- 
tificates surrendered, and debited for those re-issued. Either of the new certificates may then 
be transferred as previously explained. 

Transferring Stock Certificates. Stock Certificates are transferred in the 
same manner as installment certificates, but the entries made in the Stockholders’ Ledger 
are just the opposite of those required in the Installment Ledger, that is, when a stock certifi- 
cate is surrendered the stockholder is debited, and when a certificate is issued the stockholder 
is credited The reason for this difference is obvious, since, in the Installment Ledger, the 
loldei is debited for stock subscribed, while inthe Stockholder’s Ledger he is credited for all 
shares issued. 

There should be records in the Installment Ledger or the Stockholder’s Ledger for 
every certificate issued, surrendered, transferred, or re-issued. For an illustration of the 
manner of recording transfers, see the account with R. C. Venable in the Installment Ledger 
on page 14, also in the Stockholder’s Ledger page 16. 

The Corporation by-laws should always provide that transfers of stock shall be recorded 
in the corporation books. Otherwise, it would be impossible to know who the stockholders 
of a corporation are,- neither would it be possible for the corporation bookkeepers to know 
what persons are entitled to dividends or liable for assessments, or for the officers to know 
the number of votes which the several stockholders are entitled to cast at elections, etc. 

When assessments are to be levied or dividends declared, it is customary to close the 
books against transfers for a short time before the assessment or dividend is to be paid. This 
is necessary in order that the bookkeepers may have time to make the proper apportionment 
among the stockholders. 

Levying and Collecting Assessments. 

Stock may be assessable or non-assessable, according to the agreement under which it 
is issued. When assessments are permitted, they may be levied either bv the directors of the 
corporation, or by a vote of the stockholders, as may be determined by the by-laws of the 
corporation or by the statutes of the state in which the incorporation was made. 

If assessments are not paid, the stock may, after due notice, be declared forfeited and 
may then be sold, the proceeds being used to pay the assessment, and the remainder, if any. 
jemg returned to the person whose stock was sold. There is much variation in the laws of 
the several states, as to the terms and conditions governing assessments and the forfeiture of 
stock for non-payment. 

t"^?^ eSSmen * When an assessment has been decided upon, a list of the 

stockholders is made in the Assessment Book, a form of which is shown on page 17. If there 
are but a few stockholders, and if assessments are seldom made, a special book is not re- 
quired, an assessment list being simply made out on a sheet of paper ruled for the purpose. 

I he assessment list shows the number of shares upon which each stockholder is assessed, the 
amount, date of payment, etc. The assessment lists are numbered in the order the assess- 
ments are made, the first list being “No. One,” the second “No. Two,” and so on. 


CORPORATION AND VOUCHER ACCOUNTING. 


« 


Notice of Assessment. When an assessment has been levied, a proper notifica- 
tion, duly signed by the president and the secretary of the company, should be mailed to each 
stockholder. 

The following would be an appropriate form for such notification : 

Hampton, III., June 17, 1901. 

Mr. N. A. Walters, Vinton, Iowa. 

Dear Sir : — At a legally called meeting ctf* the stockholders of the Hampton Milling Co., 
which was held at the company’s office in this city on June 15, 1901, it was decided by a 
majority vote of the stock represented at said meeting, to levy an assessment of five (5) 
per cent of the par value of all the common stock of said company, the same to be payable in 
cash to C. W. Moore, treasurer, at the company’s office in this city, on or before July 1, 1901. 

It was further voted that payments of said assessments, if not made on or before Aug. 
1, 1901, should be declared delinquent, and that all stock upon which said assessments had 
not been paid should, after published notice, be sold at public vendue on Sept. 1, 1901, at two 
•o’clock p. m. at the company’s office in this city. 

The amount of said assessment standing against your name as holder of Certificate No. 
12, Fifty Shares, is Two Hundred and Fifty Dollars ($250) and you are hereby notified to 
pay the same in accordance with the terms of this notification. 

Very respectfully, 

J. B.' Wilson, President. 

Cilas. S. Blake, Secretary. 

Note — I n some states the law provides that notices of assessment may be legally made by publication for 
a specified period in any newspaper of general circulation in the community where the company is located. 


Declaring and Distributing Dividends. 

Dividends are usually declared by a majority vote of the Board of Directors, and they 
•can be legally paid out of accumulated profits only. 

When sufficient gains have been made to justify the declaring of a dividend, the books 
are closed in the usual manner, after which the Loss and Gain Account is closed into “Sur- 
plus” and “Dividend No. One,” a journal entry being made in the following form: 

Loss and Gain $13767.25 

Dividend No. 1 12500.00 

Surplus 1267.25 

For net gains carried to Div. No. One and Surplus for a five per cent dividend on the 
issued stock, $250,000. 

Note — T he dividend accounts are designated by number, and in the order in which the several dividends 
are declared. 

A list of the stockholders is then made out in the Dividend Book, the several columns 
being filled out, as shown in the form of this book on page 17. 

When the dividends are paid, an entry is made on the credit side of the Cash Book as 
follows : 

Dividend No. 1 12500. 

For dividends paid as per Dividend Book, page 17. 

Illustrative Example. 

To afford the student an illustration of the practical use of the books described in the 
preceding pages, and of the general procedure required, we now assume the organization of 
a corporation, the Glendale Creamery Co., of Cedar Rapids, Iowa, and give in their order 
the assumed facts, and, in complete form, the various books and entries required. 

The student is recommended to study these books and entries carefully, and in connec- 
tion with the description of the books as previously given. 


GLENDALE CREAMERY CO. 


9 


Memoranda of the Glendale Creamery Co. 

1 . 

A number of persons having interested themselves in the formation of this company, 
and promises having been secured for sufficient stock subscriptions to justify its incorpor- 
ation, the several incorporators held a meeting for the purpose of effecting a temporary or- 
ganization, and attaching their signatures to a Stock Subscription Agreement. 

The following minutes of this meeting appear on the Minute Book : 

Cedar Rapids, Iowa, March i, 1900 . 

Upon the above date the proposed incorporators of the Glendale Creamery Co. held a 
meeting at the office of John S. Cooper, in the city of Cedar Rapids, for the purpose of at- 
taching their signatures to a Stock Subscription Agreement, and for the purpose of taking 
steps for the permanent and legal organization of the company. 

John S. Cooper was elected chairman and T. S. Maynard secretary. 

The chairmah^then announced that promises had been secured for subscription of the 
entire amount of stock of the proposed corporation, and he suggested that before proceed- 
ing further, the incorporators present attach their signatures to the Stock Subscription 
Agreement, and that the same be duly certified to, and made a part of the company records. 
The suggestion was complied with, and subscriptions of stock to the amount of Fifty Thou- 
sand Dollars were duly signed and certified. 

Moved by Mr. Stacy that a committee of three incorporators be appointed by the chair- 
man to prepare Articles of Incorporation, said committee to make its report at a meeting to 
be subsequently called by the chairman. The motion was carried and the following gentle- 
men were appointed by the chairman to serve on such committee : 

Chas. M. Stacy, Homer Allen, and M. F. Thompson. 

After some further informal discussion of the prospects and affairs of the proposed 
company, the meeting was adjourned subject to the call of the chairman. 

T. S. Maynard, Secretary. 

Approved March 5, 1900. 

John S. Cooper, 

President. 

The following is the Stock Subscription Agreement, as signed and certified at the meet- 
ing referred to : 


StocR Subscription Agreemen 

Cedar Rapids, Iowa, March 1, 1900. 

We, the undersigned, hereby subscribe for shares of stock in the Glendale Creamery Co., 
a corporation to be organized under the laws of the State of Iowa, the same to have a capital- 
ization of Fifty Thousand Dollars ($50,000), to be divided into Five Hundred (500) 
Shares of One Hundred Dollars ($100) each. The said shares subscribed for are of the 
numbers and amounts hereunto set opposite our names, and are to be paid for in full under 
such'rules as may hereafter be legally adopted by the incorporators of said company. 


NAME 

RESIDENCE 

NO. OF SHARES 

AMOUNT 

Chas. M. Stacy 

Cedar Rapids, la. 

One Hundred 

$10000 

Homer Allen 

Marion, la. 

Fifty 

5000 

R. C. Venable 

Marion, la. 

One Hundred and Fifty 

15000 

John S. Cooper 

Cedar Rapids, la. 

One Hundred 

10000 

M. F. Thompson 

Cedar Rapids, la. 

Seventy-Five 

7500 

I. S. Maynard 

Cedar Rapids, la. 

Twenty-Five 

2500 


10 


CORPORATION AND VOUCHER ACCOUNTING. 


Personally appeared before me, a Notary Public in and for the County of Linn, State 
of Iowa, the persons whose names are hereunto recorded, and who in my presence voluntar- 
ily signed the same, as subscribers for stock in the Glendale Creamery Co., to the amounts 
set opposite their names in the foregoing Stock Subscription Agreement. 

In witness whereof, I have hereunto set my name and the official seal of my office, at the 
City of Cedar Rapids, County of Linn, State of Iowa, this first day of March, 1900. 

\ John S. Cooper, 

[seal] Notary Public. 

Note— -The following Stock Subscription Agreement illustrates the form required for the incorporation of 
a partnership business in which the partners are to receive paid-up stock for their respective interests, other 
stock being subscribed by outside parties. 

Stock Subscription Agreement for the Formation of the Delavan Hardware Co. 

. Arcade, Wis., Jan. i, 1901. 

. We ’ t “ e undersigned, hereby agree to subscribe for the number of shares and amounts of stock set op- 

our names, in the Delavan Hardware Co., an incorporation to be formed under the laws of the State 
?> j a - m a . ccort L nce with the following conditions, to-wit: The members of the firm of Delavan, 

Randall & Co., in consideration of the legal transfer of all their interest in the property, business and good 
will, or other resources of said firm, also their liabilities which are to be assumed by the proposed incor- 
poration, and all of which resources and liabilities are as set forth in the duly certified financial statement, 
of this date already submitted and hereby accepted, are to receive and have issued to them paid-up stock in 
said proposed incorporation, as follows : — 

Henry F. Delavan; Forty Shares, $4000. 

John S. Randall ; Thirty Shares, $.3000. 

Amos Long; Thirty Shares, $3000. 

The shares subscribed for by the undersigned and which are to be paid for in cash at their par value, 
and at such time as may be determined by the directors of the corporation, are as follows : — 

A. T. Smith ; Ten Shares, $1000. 

S. H. Day; Fifteen Shares, $1500. 

P. S. Johnson; Twenty Shares, $2000. 

R. W. Miller; Five Shares, $500. 

2 . 

At a subsequent meeting on March 5, 1900, called to hear the report of the committee 
appointed at the meeting of March 1, a permanent organization was effected by the adoption 
of the following Articles of Incorporation and by the election of the officers named : 

Articles of Incorporation for the Glendale Creamery Co. of 

Cedar Rapids, Iowa. 

We, the undersigned, desiring to form ourselves into a body corporate, under the laws 
of the State of Iowa, do, for this purpose adopt for our organization, and as a basis for said 
incorporation, the following Articles of Incorporation: 

ARTICLE I. 

The name of this corporation shall be The Glendale Creamery Co., and its principal 
place of business shall be Cedar Rapids, in the County of Linn, State of Iowa. 

ARTICLE II. 

The purpose for which this corporation is formed is the carrying on of a general dairy- 
ing and milk supply business, both wholesale and retail, and the manufacture and sale of dairy 
products of all kinds, also the acquisition of lands, buildings, machinery and such other 
property as may be necessary for carrying on the said business, and to do such other acts as 
are usually done in connection with the management of said business. 

ARTICLE III. 

The amount of the Capital Stock of said corporation shall be Fifty Thousand Dollars 
($50,000) to be divided into Five Hundred Shares of One Hundred Dollars ($100) each, the 
same to be issued only when paid for in cash or its equivalent. 


GLENDALE CREAMERY CO. 


11 


ARTICLE IV. 

This corporation shall be deemed to be in legal existence, and its officers, qualified to 
do business in its name from and after the filing of these Articles of Incorporation, in the 
Office of the Secretary of State for the State of Iowa, due notice of the same having been re- 
ceived by the corporation secretary, and shall continue in existence thereafter for the period 
of twenty-five years, unless sooner legally dissolved. 

ARTICLE V. 

The officers of this corporation shall comprise a President, Vice President, Secretary, 
Treasurer, and a board of five directors, two of whom shall be the President and the Secre- 
tary of the corporation, who shall respectively serve as the President and Secretary of the 
Board of Directors. These officers shall be chosen at the regular annual meeting of the cor- 
poration, and their terms of office shall continue until their successors have been chosen and 
have qualified. 

The duties of said officers shall be such as may be prescribed in the By-Laws of the cor- 
poration, to be hereafter adopted by said Board of Directors, as hereinafter provided for. 

ARTICLE VI. 

The affairs of this corporation, in so far as they are not regulated by these Articles of 
Incorporation or by the majority vote of the incorporators at any legal meeting, shall be un- 
der the control of the Board of Directors, who shall hold meetings, adopt By-Laws, and take 
such action as to the affairs of the company, as may seem to them advisable. 

ARTICLE VII. 

The regular annual meetings of this corporation shall occur on the first Tuesday in 
April, of each year, at such place and hour as may from time to time be designated by the 
Board of Directors. Until the occurrence of the first annual meeting, on the first Tuesday in 
April, 1901, the following persons are hereby elected to serve in the offices designated: 

President — -John S. Cooper. 

Vice President — Homer Allen. 

Secretary — T. S. Maynard. 

Treasurer — Chas. M. Stacy. 

Directors — John S. Cooper, T. S. Maynard, M. F. Thompson, R. C. Venable, Chas. 

M. Stacy. 

ARTICLE VIII. 

At all stockholders’ meetings, each stockholder shall have one vote for each share of 
stock owned by him, as shown by the books of the corporation. 

ARTICLE IX. 

The greatest amount of indebtedness for wjiich this corporation shall make itself liable, 
shall not at any time exceed two-thirds of its capital stock. 

ARTICLE X. 

The money of this corporation shall be paid out only by the treasurer, and upon war- 
rants duly signed by the president and the secretary, and there shall be kept in the offices of 
the secretary and the treasurer, all needed books and accounts necessary to show plainly and 
completely the financial transactions of these officers, the same to be always accessible to any 
stockholder who may wish, to inspect them during regular business hours. 


CORPORATION AND VOUCHER ACCOUNTING. 


ARTICLE XI. 

These Articles of Incorporation may be amended at any regular meeting, or at any 
meeting called for the purpose, by a two-thirds majority of all stock voted. 

Witness our hands this 5th 'day of March, 1901. John W. Cooper. 

T. S. Maynard. 

M. F. Thompson. 

R. S. Venable. 

Homer Allen. 

Chas. M. Stacy. 

Note — The Articles of Incorporation may contain any other general regulations that the stockholders 
may wish to embody in them, tat any minor matters, such as relate to tne duties of officers, the order of busi- 
ness meetings, etc., should be' included in the by-laws, the formulation and adoption of which are usua'ly 
left to the Board of Directors. 

3 . 

Upon the adoption and signing - of the Articles of Incorporation, the document was re- 
corded in the office of the County Recorder and a copy was sent for record to the office of 
the Secretary of State, accompanied by the legal fees. 

When the Articles of Incorporation were returned with the certificates of record duly 
attached, they constituted the “Charter” of the corporation, which now began its legal ex- 
istence. 

4 . 

Upon the receipt of the Charter, the President called a meeting of the Board of Directors, 
which was held on March 20, 1900, and at this meeting it was decided to call in an install- 
ment of twenty-five per cent of the stock subscribed, the same to be due and payable to the 
Treasurer on March 22, 1900. 

The Secretary also made out Installment Certificates for each stockholder, the accom- 
panying form illustrating the one made out for Chas. M. Stacy : 


Form of Installment Certificate.*- 


Installment Certificate. 


March 2J < 190 JL 

Per rent 25 

No. Shares *00 

Amount $2500 00 

Received the attached Certificate. 

Chas. M. Stacy 


Amount. $2500 00 100 Shares. 

Installment Certificate No. t 

Issued by 

GLENDALE CREAMERY COMPANY, 

Cedar Rapids, Iowa,J 1^T^_^L_I90_ o _ 

This Certifies That Chas. M. Stacy 

has to his credit in the treasury of this Company the sum of 

Two Thousand Five Hundred Dollars, the same being 

the first installment of percent of 1 0 ° shares 

due March 21, 1900 

This certificate is transferable only on the books of this 
company, upon surrender of same by the holder or his lawful 
representative. 

In evidence whereof we have duly affixed our signatures 
and the corporate seal this 21st day of March, 190 0 

T. S. Maynard, Secretary. Joftn W. Cooper, President. 
[SEAT] 


At this meeting action was taken as to the salaries to be received by the officers, a cor- 
porate seal was adopted, a superintendent and manager was elected, a committee of direc- 


GLENDALE CREAMERY CO. 


13- 


tors was appointed to report upon a site for the company’s plant, and to advertise for plans 
for buildings, bids for machinery, etc. The secretary was also authorized to purchase any 
needed books or other office equipment that might be necessary for conducting the affairs of 
the corporation, the same to be paid for out of the first funds that should be paid into the 
treasury. The Second National Bank of Cedar Rapids was.^psen as the bank of deposit for 
the corporation funds. 9 

5 . 

The installments called for March 21, having been duly paid and certificates issued there- 
for, the Installment Book stands as follows: 

... Installment No. - 

Comprising payments of an installment o f 25 per cent' of the Capital Stock of Glen- 
dale Creamery Co., called for at a meeting of the Board of Directors on Mar. 20, xqoo, and 
due Mar. 22 , iqqq. 


STOCKHOLDERS 

NO. OF 

SHARES 

AMOUNT 

1 

NO. OF 

CERT 

AMOUNT 

RECEIVED 

L. F. 

DATE 


Homer Allen 

50 

1250 

1 

1250 

1 

March 

21 

John W. Cooper 

100 

2500 

2 

2500 

1 

< ( 

21 

M. F. Thompson 

75 

1875 

3 

1875 

1 

( ( 

22 

T. S. Maynard 

25 

625 

U 

625 

1 

( ( 

22 

R. C. Venable 

150 

3750 

5 

3750 

2 

( < 

22 

Chas. M. Stacy 

100 

2500 

6 

2500 

2 

( ( 

23 

Totals 

500 

12500 


12500 





6 . 

On June I, the directors issued a call for another installment of stock subscriptions to the- 
amount of 50 per cent, payable June 10, which installment was duly paid by the stockhold- 
ers. On Oct. 15, a call was issued for the third and final installment of 25 per cent, payable 
Oct. 20, which was duly paid, except the installment due from M. F. Thompson, payment of 
which was deferred until Dec. 1. During this period, and before the final installments were 
paid, several transfers of installment certificates had been made. 

The forms on page 14 illustrate the several Installment Ledger accounts as they ap- 
peared on Nov. 1. The student is advised tb study each entry on these accounts, in connec- 
tion with the memoranda of transfers. 

Notice that each account is debited for the shares originally subscribed and for each in- 
stallment certificate subsequently issued ; also, that each account is credited whenever an in- 
stallment is paid or when a certificate is surrendered and cancelled. 

When all installments are paid or when a subscriber transfers all his stock, the account 
is closed. (Why is the account with M. F.- Thompson not closed?) 

The following are the transfers of installment certificates made prior to the closing of 
the several accounts : 

Apr. 10, T. S. Maynard transfers his 25 shares to John W. Cooper. 

Apr. 25, M. F. Thompson transfers twenty shares to Chas. M. Stacy. Mr. Thompson 
first surrenders his installment certificate No. 3, (for installment No. 1, 75 shares) and has 
two other certificates issued to him (Nos. 8 and 9.) He is first credited for the unpaid por- 
tion of the shares surrendered (75 per cent of $7500, or $5625.) If he had transferred all 
his shares, his account would now be in balance, but as he wishes to transfer but twenty 
shares, he is charged for the unpaid part of the shares represented by two new certificates to 
be issued to him, one for twenty and the other for fifty-five shares. As he now transfers the 
twenty shares, he is credited for the unpaid amount of these ($2000 x 75 per cent or $1500) 
and Mr. Stacy to whom they are transferred is debited for them. In studying these trans- 
fers, remember that the Installment Ledger must show an entry for every certificate sur- 
rendered, transferred , or issued. 


14 


CORPORATION AND VOUCHER ACCOUNTING. 


Installment Ledger. 


CHAS. M. STACY, Cedar Rapids , Iowa. 


Date 

No. of 
Shares 

Subscribed, 
Re-Issued 
or Transferred by 

Per 

Cent 

Unpaid 

No. of 
Cer. 

Amts. 

Dr. 

1 

Date 

Certificates Sur. or Transferred. 

Installments Paid 

No. of 
Shares 

Transferred to 
or Sur. 

P. C. 

U’p’d 

Cer. 

No. 

Inst. 

No. 

No. of 

S’h’s. 

Per 

Cent 

Cer. 

No. 

Amn't 

Cr. 

1900 







1900. 











Mar. 

1 

100 

Subscribed 

100 


10000 

Mar. 

23 





i 

100 

25 

6 

2500 

Apr. 

25 

20 

M.b' . Thompson 

75 

10 

1500' 

June 

10 





2 

120 

50 

15 

6000 








July 

6 

20 

T .B. Spencer 

25 

10 





500 








Oct. 

18 



\ 


3 

100 

25 

23 

2500 







11500 











11500 







1 











HOMER ALLEN, Marion, Iowa. 


1900 







1900 







, 

' 


Mar. 

1 

50 

Subscribed 

100 


5000 

Mar. 

21 





1 

5 a 2 5 

1 

1250 

Sept. 

1 

25 

Reissued 

25 

17 

625 

June 

6 





2 

50150 

11 

2500 

Sept. 

1 

25 

‘ * 

25 

18 

625 

Sept. 

1 

50 

Surrendered 

25 

1-11 




1260 








Sept. 

1 

25 

R.C. Venable 

25 

17 


1 


625 








Oct. 

21 





3 

25125 

n 

625 


— 





6250 










6260 










— 










R. C. VENABLE, Marion, Iowa. 


1900 

Mar 

Sept. 

1 

1 

150 

25 

Subscribed 

Homer Allen 

100 

25 

19 

15000 

625 

1900 

Mar. 

June 

Oct. 

22 

17 





1 

2 

3 

150 

150 

175 

25 

50 

25 

5 

13 

22 

3750 

7500 

4375 

— 

— 





15625 


- 









15625 


JOHN W. COOPER, Cedar Rapids, Iowa. 


1900 

Mar. 

Apr. 

10 

„ 1 

O 1 

o 

Subscribed 

T. S. Maynard 

100 

75 

7 

10000 

1 875 

1900 

Mar. 

June 

Oct. 

21 

7 

16 





1 

2 

3 

100 

125 

125 

25 

50 

25 

1 

*"*■ ifc 

2500 

6260 

3125 

- 

- 





11875 


= 









11875 


M. F. THOMPSON , Cedar Rapids, Iowa. 


1900 







1900 











Mar 

1 

75 

Subscribed 

100 


7500 

Mar. 

22 





1 

75 

25 

8 

1875 

Apr. 

25 

20 

Reissued 

75 

8 

1500 

Apr 

25 

75 

Surrendered 

75 

3 





5625 

Apr. 

25 

65 

‘ ‘ 

75 

9 

4125 

Apr. 

25 

20 

Chas. M. Stacy 

75 

8 





1500 








June 

9 





2 

55 

50 

14 

2750 


T. S. MAYNARD, Cedar Rapids, Iowa. 


1900 

Mar. 

1 

25 

Subscribed 

100 


2500 

1900 

Mar. 

Apr. 

22 

10 

25 

JohnW. Cooper 

75 

A 

1 

25 

25 

4 

625 

1875 







2500 











2500 




















T. B. SPENCER, Vinton, Iowa. 


1900 

July 


SO 


Chas. M. Stacy 


25 


16 


500 


1900 

Oct. 


15 


S 20 


20 500 


GLENDALE CREAMERY CO. 


IS 


July 6, Chas. M. Stacy transferred twenty shares (Cer. No. io) to T. B. Spencer, Vin- 
ton, Iowa. 

Sept, i, Homer Allen transferred twenty-five shares to R. C. Venable. 

Whenever a subscriber paid his final installment the secretary issued to him a stock cer- 
tificate representing the total number of paid up shares to which he was entitled. 

The accompanying form illustrates the certificate for ioo shares that was issued to 
Chas. M. Stacy when he paid his final installment on Oct. 18. At this time Mr. Stacy’s ac- 
count in- the Installment Ledger being in balance, is ruled up and closed. An account with 
him is immediately opened in the Stockholder’s Ledger, and he is credited with his ioo shares 
of paid up stock. 


Forip of Stock Certificate. 

Certificate No. One_ 

For One Hundred Shares 

ISSUED TO 

Chas. M. Stacy, 

Cedar Rapids, la. 

Paled Oct. 18 iqp 0 

FROM WHOM TRANSFERRED 


Dated 190 

No. Original [[ No. Original No. of Shares 
Ceriificafe Shares Transferred 

|| | 

Received Certificate No. One 

for 1 10 Shares 
this day of Oct., jqp 0 
Chas. M. Stacy 


7 . 

The forms on page 16 show the several accounts in the Stockholder’s Ledger as they ap- 
peared on March i, 1901, and after the following transfers of stock had been made : — 

November 15, T. B. Spencer to J. M. Stokes of Marion, Iowa, 20 shares. 

December 28, M. F. Thompson to Homer Allen, 55 shares. 

January 25, 1901, R. C. Venable to J. W. Cooper, 50 shares. Mr. Venable surrenders 
his certificate No. 3 for 175 shares and has four other certificates issued, three for 50 shares, 
and one for 25, transferring one of the former to Mr. Cooper. 


Glendale Creamery Company. 


STATE OF 


Iowa 


Capital Stock S 50,000.00 


Certificate No. 1 

Chas. M. Stacy 


This Certifies That 

is the owner of One Hundred -^v^ Shares of the Capital Stock 
of The Glenda le Creamery Company 


fully paid, transferable only on the Books of the Corporation, by him or his 
attorney, upon surrender of this Certificate. 

In Witness Whereof the officers of this Corporation have hereunto sub- 
scribed their names and caused the Corporate Seal to be hereto affixed at 

Cedar Rap ids, la. , this 18th day nf ' October 190 0 


T. S. MAYNARD, 


Secretary. 


JOHN W. COOPER, 

President. 


8 . 

On March 1, 1901, a special meeting of the Board of Directors was called to consider 
the finances of the company. It was found that the available capital had been largely ex- 
pended in the purchase of plant, machinery, stock, etc., and that the payment of obligations 
soon to mature would produce a deficit in the funds. As it would be several months before 
profits would begin to accrue from the business, it was voted to levy a cash assessment of 
ten per cent on the capital stock, the same to be due and payable on or before March 13, 
1901, and to be declared delinquent if not paid by May 1, 1901. 

An assessment list was accordingly made out, and the form on page 17 shows this list 
as it appeared on the day of delinquency, May x, 1901. 


16 


CORPORATION AND VOUCHER ACCOUNTING. 


Stockholders’ Ledger. 

T. B. SPENCER, Vinton, Iowa. 


SHARES TRANSFERRED OR SURRENDERED 

SHARES 

ISSUED, RE-ISSUED OR TRANSFERRED 

| Date 

No. of 
Sh’r’s. 

Transferred to 

No. of 
Cert. 

Amount Dr. 

Date 

No. of 
Shr’s. 

Transferred by 

No. of 
Cert. 

Amount Cr. 

1900 

Nov. 

15 

20 

J. M. Stokes 

i 

2000 

1900 

Oct. 

21 

20 

Issued. 

i 

2000 














JOHN W. COOPER , Cedar Rapids, Iowa. 



R. C. VENABLE, Marion, Iowa. 


1901 






1900 






Jan. 

25 

175 

Surrendered 

3 

17500 

Oct. 

17 

175 

Issued 

3 

17500 

25 

50 

J. W. Cooper 

11 

5000 

1901 

Jan. 

25 

50 

Re-issued 

9 

5000 







25 

50 

• ‘ 

10 

5000 








25 

50 

] " 

11 

5000 








25 

25 


12 

2500 


CHAS. M. STACY, Cedar Rapids, Iowa. 






|| 1 

' 

II 

1900 

Oct. 

19 

100 

Issued 

J j 10000 

HOMER ALLEN, Marion, Iowa. 






1 

1900 
Oct. 
Dec. ■ 

21 

28 

25 

55 

Issued 

M. F. Thompson 

5 

8 

2500 

5500 

M. F. THOMPSON , Cedar Rapids, Iowa. 

1900 

Dec. 

28 

55 

Homer Allen 

6 

5500 

1900 

Dec. 

1 

55 

Issued 

6 

5500 






J. M. STOKES, Marion, Iowa. 


1900 

Nov. 


15 


T.B. Spencer 


7 


2000 


Glendale creamery co. 


17 


Assessment List No. One. 


For Ten (io) per cent of the Capital Stock of the Glendale Creamery Company, levied 
March i, 1901, and due March 15, 1901. Delinquent May 1, 1901. 


STOCKHOLDERS 

ADDRESSES 

NO OF 

sh’r’s 

AMT. OF 
ASSESSMENT 

AMT. 

PAID 

DATE 

REMARKS 

John W. Cooper 

R. C. V enable 

Chas. M. Stacy 
Homer Allen 

J. M. Stokes 

Cedar Rapids, la. 
Marion, la. 

Cedar Rapids, la. 
Marion, la. 

Marion, la. 

Totals 

175 

125 

100 

80 

20 

1750 

1250 

1000 

800 

200 

1750 

1250 

1000 

800 

200 

Mar. 

Mar. 

Mar. 

Mar. 

Mar. 

16 

18 

n 

19 

15 

Cash 

Note at 60 days 
Cash 

Cash 

Note at SO days 

500 

5000 

5000 


Ppn<W E th ThlS llst made out from the Stockholders’ Ledger, as it stood on the day the assessment is levied. 

reparation of an assessment list, the books are closed against stock transfers. At the time an 
assessment is paid, the stockholder is given a receipt for the amount paid. 


9 

The plant having been in successful operation for a number of months, the books were 
closed on Nov. 1, 1901, when it was found that the net profits of the season amounted to 
?3 2 SO-7S> that there was salable merchandise on hand to the amount approximately of $4000, 
and cash in bank, $8600. As there were no obligations, the discharge of which could not 
safely be met at maturity by future receipts, it was decided that the conditions warranted 
the declaring of a dividend. Accordingly the directors ordered that a Cash Dividend of 
five per cent of the capital stock be declared, the same to be due and payable on Nov. 15, 
1901. Thereupon the bookkeeper made entries in the Dividend Book as per the accompany- 
ing form, and checks for the amounts due were mailed to the several stockholders. 


Dividend Book. 


Dividend No. 1 Per Cent 5 

Dividend Nov. 1, iqq 1 Payable Noy.JJJ_ igo^J_ 


STOCKHOLDERS 

ADDRESSES 

NO. OF 
SHARES 

AMT. OF. 
DIVIDEND 

WHEN 

PAID 

REMARKS 

John W. Cooper 

R. C. Venable 

Chas. M. Stacy 
Homer Allen 

John M. Stokes 

Cedar Rapids, la. 
Marion, Iowa. 
Cedar Rapids, la. 
Marion, la. 

Marion, la. 

Totals 

175 

125 

100 

80 

20 

875 

625 

500 

400 

100 


Nov. 1 5 

Nov. 15 

Nov. 15 

Nov. 1 5 

Nov. 15 

Check No, 85 
“ “ 87 

“ 88 
“ “ 90 

“ “ 92 

500 

' 2500 



Note Dividends may be paid at the company’s office, the stockholders appearing personalty, receiving their 
money, and receipting for the same or, especially if there are a number of stockholders, not all of whom 
may live near where the company s business is conducted, it may be found more convenient simply to mail to 
S ch stockholder a check for the amount, which, when endorsed and returned, constitutes a sufficient receipt 
The latter method is followed by most large concerns. p 


18 


CORPORATION AND VOUCHER ACCOUNTING. 


Entries Required by Transactions in the Foregoing Memoranda. 

Entries Required by Transactions in ,the Foregoing Memoranda. 

1. As the company at the time of its organization owns no tangible property, no entry 
is required until the first installment is paid. At this time entries are made on the debit side 
of the Cash Book for the several installments as they are paid, the following being the 
form of entry : 

Mar. 21 Subscription 3750 

For installment No. i paid by Homer 
Allen and John S. Cooper per Install- 
ment Book this date. 

These several entries are then posted to the credit of the Subscription Account in the 
General Ledger. When all the Installments have been paid, this account will stand credited 
with the full amount of the capital stock. 

2. When the final installment is paid by a stockholder, and a stock certificate is issued, 
an entry is made in the Journal, debiting Subscription and crediting Capital Stock. The fol- 
lowing is the form of entry required : 


Oct. 16 Subscription 2000 

Capital Stock 2000 


For 20 shares issued to T. B. 

Spencer per Certificate No. 2. 

When all the stock has been issued and the several entries posted, the Subscription Ac- 
count will be in balance and should be ruled up and the Capital Stock Account will stand cred- 
ited with the entire amount of paid-up stock. 

3. When the Assessments levied on Mar. 5 are paid, Cash is debited to Assessment No. 
1, as follows: 

Mar. 15. Assessment No. 1 for 10 per cent of I 75 ° 

175 shares owned by John W. Cooper. 

3. When the assessments are all paid and the payments posted, the account with Assess- 
ment No. 1 will stand credited with the whole sum levied, or $5000. The student will note 
that this account, while representing a loss to the individual stockholders, stands for a gain 
to the corporation, since it represents an increase in the working capital of the corporation 
for which there is no corresponding outlay. Hence in closing the books, this account is prop- 
erly included with the gains, although it represents an outlay on the part of the individual 
stockholders, for which there is apparently no return. In reality, however, this account 
simply stands for an increase in the investment which is not represented by a corresponding 
enlargement of the Capital Stock. It is not really a loss to the stockholders, since it, pre- 
sumably, is devoted to making their business more valuable. Neither is it really a gain to 
the business, since it does not represent actual profits^ 

Instead of levying an assessment when a corporation needs an increase in its working 
capital, it is now more usual to provide for a further increase of stock, or to issue bonds or 
other interest-bearing obligations upon which money may be borrowed. 

When an increase in the working capital is anticipated at the time the corporation is 
organized, a certain amount of the capital stock is withheld from subscription, and reserved 
as “Treasury” or “Surplus” stock, to be sold at any time when it may be required to increase 
the funds of the company. Should it not be found necessary to sell this stock, it may subse- 
quently be distributed among the stockholders in the form of a “Stock Dividend,” certifi- 
cates for the stock being issued, instead of cash, as in the case of an ordinary dividend. 


OPENING ENTRIES, ETC. 


19 


4. At the time the books arre closed preparatory to declaring the dividend as ordered 
on Nov. 1, the Loss and Gain Account is closed into “Surplus” and “Dividend No. 1,” as 
per the following Journal Entry: — 

Loss and Gain 3 2 56-7S 

Dividend No. 1 , , 2500.00 

Surplus 756.75 

For net gains carried to Surplus and Dividend 
No. 1, for 5 per cent of issued stock, 

$50,000. 

When the dividends are paid the following credit entry is made in the Cash Book : — 

Dividend No. 1 2500 

For dividends paid as per Div. Book, page 1. 

When the above entries are posted, the accounts with Loss and Gain and Dividend No. 1 
will be in balance and should be ruled up, while the Surplus Account will represent undistrib- 
uted profits to the amount of $756.75, that may either be subsequently distributed by means 
of another dividend, or kept in reserve to cover possible losses, etc. 

The balance of the Surplus Account is treated as a liability when the books are closed. 

Entries for Other Conditions of Openings. 

To the Student. Study carefully the following conditions and the entries given, 
after which write up the required entries for the test exercises that follow. 

Condition Number One. 

A corporation is capitalized for $60,000 ; of this amount $50,000 is subscribed for, and 
the remaining $10,000, is reserved as Treasury Stock. 

Required Entries. At the time the reserve is made this entry is made in the Journal : 

Treasury Stock ioooo- 

Capital Stock ioooo 

For amount of stock reserved to be disposed of as future exigencies may require. 

When Treasury Stock is sold, debit Cash (or whatever is received) and credit “Treas- 
ury Stock.” 

When the Stock is issued, no entry is required in the Journal, since the Stock has al- 
ready been passed to the Capital Stock Account. 

This method of entry will, when all stock is issued, leave the “Treasury Stock” ac- 
count in balance, and the “Capital Stock” account credited with the entire amount of issue. 

The Treasury Stock of a company may be sold for less or more than its face or “par” 
value, according as its market price, may vary. In this case the margin of discount or prem- 
ium is carried to an account called “Stock Discounts and Premiums.” 

The following entries illustrate those required when Treasury Stock is sold below or 
' above par. 

Cash 4750 

Stock Discounts & Premiums 250 

Treasury Stock 5000 

For fifty shares of Treasury Stock sold this day at 5 per cent below par, and issued to 
F. M. Brown. 

Cash 2550 

Stock Discounts & Premiums • 50 

Treasury Stock 2500 - 

For twenty-five shares Treasury Stock sold this date at 2 per cent above par, to N. S. 
French. 


20 


CORPORATION AND VOUCHER ACCOUNTING. 


Condition No. Two. 


The printing house of S. T. Jones & Co., that has been conducted as a partnership by 
S. T. Jones, James Long and A. H. Platt, is to be incorporated, under the name of The Jones 
Printing Co., under a capitalization of $45,000, to consist of 900 shares of $50 each. 


Of these, the three partners are to receive 300 shares each of paid-up stock for their 
respective interests. The assets of the business, as turned over to the corporation by the 
partnership are as follows : — 


Cash 

Plant (Presses, Machinery, type, etc.) 

Mdse. ( Paper, blanks, and other salable products per Invt. ) 

Bills. (Receivable notes rec’d. in settlement of outstanding accounts) . 


$ 5000.00. 
20000.00. 
3528.75. 
2348.20. 


$30876.95. 

Required Entries. It is assumed that the partnership books have been closed, that 
a satisfactory adjustment of previous gains or losses has been effected, that the books prev- 
iously used in the business are to be continued, and that the respective partner’s accounts 
stand credited with the total amount of net capital as follows : 

S. T. Jones Cr. $10756.50. 

James Long Cr. 9873.80. 

A. H. Platt Cr. 10246.65. 


$30876.95. 


10756.50 

9873.80 

10246.65 

14123.05 

45 °°° 


The following entry is now made in the Journal: — 

S. T. Jones 

James Long 

A. H. Platt 

Franchise 

Capital Stock 


For capitalization of Jones Printing Co. as this day agreed upon, and as per closing 
statement of the books of S. T. Jones & Co., for Jan. 15, 1901. The above entry, when 
posted, will close the partner’s accounts, and leave the books in balance as follows 


Cash .... 
Plant 
Mdse 
Bills Rec. 
Franchise 


Capital 


Stock 


Dr. 


5000 

20000 

3528.75 

2348.20 

14123.05 


Cr. 


45000 


The Franchise Account, as here employed, shows the difference between the actual 
working capital of the business, and the Capital Stock. It may represent that part of the con- 
cern’s resources which is implied by the term “good will,” or it may stand for those “future 
prospects” which are assumed to render the total value of the business greater than the mere 
amount of its visible assets. The great majority of corporations are capitalized for amounts 
much beyond the inventories of their working capital, or assets, and the Franchise Account is 
a convenient title under which to include this seniorage of capital. 

Note The Franchise Account is so called, because it frequently represents (especially in street car, gas, 
or other municipal corporations) the value covered by a franchise owned by the company. 


OPENING ENTRIES, ETC. 


21 


Condition Number Three. 

The hardware business hitherto conducted by the partnership firm of Wade & Miller is 
to be incorporated under the name of the Western Hardware Co., according to agreement 
as follows: — 

The capitalization is to be for $40000, and to consist of 400 shares of $100 each. J. 
H. Wade is to receive 150, and E. B. Miller 100 paid-up shares for their respective interests 
m the business to be incorporated. Other parties subscribe for stock as follows : — 

Arthur Nelson 50 shares. 

S. T. Boone 25 shares. 

S. Lindsay 15 shares. 

P. J. Norman 10 shares. 

Fifty shares are to be reserved as Treasury Stock, to be disposed of as the stockholders 
may determine. 

At the time of the incorporation, the resources and liabilities of the firm of Wade & 
Miller are as listed in the following statement: — 


Resources : 

Cash on hand and in bank 

Mdse, per inventory 

Chattels per inventory 

Real Estate, Store Building and lot (estimated) 

Bills Receivable 

Accounts Receivable 

Interest accrued on accounts and notes 

Liabilities : 

Bills payable 

Accounts Payable 

Interest accrued on notes 

J. H. Wade, Partner 

E. B. Miller, Partner 


2568.20 

9256.90 

1562.10 

6000.00 

642.50 

2429.40 

75.00 


179. 

1121.40 

25 - 

12132.55 

9076.15 


22534.10 22534.10 


It is decided that the stock subscribed shall be paid in in four equal installments one 
month apart, the first installment to be due and payable immediately. This installment is 
accordingly paid in Cash. 

Required Entries. When Wade and Miller receive their stock the following Journal 
entry is made : — 

J. H. Wade 12132.55 

E. B. Miller 9076.15 

Franchise 3791-30 

Capital Stock.. 25000 

For incorporation of Western Hardware 
Co. according to agreement this day entered 
into between J. H. Wade, E. B. 

Miller, Arthur Nelson, S. T. Boone, S. Lindsay, and 
P. J. Norman, and in accordance with fin 
exhibit of the books of the firm of Wade & Miller as 
shown by closing statement of this date. 

This entry closes the partners accounts, shows excess of capitalization over net assets 
and credits capital stock with the whole amount of shares issued. 


22 


CORPORATION AND VOUCHER ACCOUNTING. 


When the first installment of this subscribed stock is paid, debit cash to subscription; 
and when this stock is issued, debit Subscription and credit Capital Stock in the Journal as 
in the case of the Glendale Creamery Co., page 18. 

The reserved Treasury Stock is shown by the following entry : — 

T reasury Stock 5000 

Capital Stock 5000 

For Fifty Shares of Treasury Stock in Western Hardware Co., which is reserved for 
future disposal as may hereafter be decided upon. 

Suppose that, after a time, it is decided that the sale of Treasury Stock is unnecessary, 
and the directors should order it retired. This would be done by the following Journal 
entry : — 


Capital Stock 5000 

Treasury Stock 5000 


For fifty Shares reserved Treasury Stock retired this date. 

This entry would close the account with Treasury Stock, while the balance of the Cap- 
ital Stock Account would show the amount of Capital Stock issued. 


Condition Number Four. 


Henry Bell, C. W. McCloud, and S. T. Smith have been conducting a tanning busi- 
ness under the firm name of McCloud, Bell & Co. They have decided to reorganize and in- 
corporate their business under the following conditions : 

The concern is to be capitalized for $30000, 300 shares of $100 each. The partners are 
to receive paid-up stock for their respective interests as follows : 

Henry Bell, 100 shares. 

C. W. McCloud, 60 shares. 

S. T. Smith, 40 shares. 


Of the remaining capital stock, 75 shares are to be subscribed for by other parties and 
the remaining 25 shares to be held in reserve as Treasury Stock. The corporation is to be 
entitled “The McCloud Tanning Co.” 


On Jan. 10, 1901, the subscription stock has been subscribed as follows: 

20 shares. 


N. S. Brown, 
Chas. Halloran, 
C. S. Atkins, 

A. L. McGuire, 

and the company was duly organized. 


25 shares. 

15 shares. 

15 shares. 

The following statement of the transferred assets and liabilities is submitted and ac- 
cepted : 


Assets : 


Plant, machinery, tools, etc 6567.80 

Mdse., leather and hides on hand 5250 

Operating products, tan bark, fuel, etc 1275 

Notes Receivable 426.50 

Harmon Leather Co. on acct 397.20 


Liabilities : 


Notes Payable 1 57 - 9 ° 

Union Market Co. on acct 129.50 


SPECIAL CONDITIONS WITH ENTRIES. 


23 


On Jan. 15, a cash installment of 25 per cent of the subscribed stock is paid, and the 
certificates of stock agreed upon are issued to the original partners. 

At this time, a new set of corporation books are opened, the books of the former part- 
nership being dispensed with. 

On Jan. 20, the remainder of the stock subscriptions are paid in cash, with the excep- 
tion of the subscription of A. L. McGuire, who gives his note at 60 days with approved se- 
curity. The stock is issued in full to all subscribers. 

On Jan. 25, the 25 shares of Treasury Stock are sold to the Union Market Co., they 
receiving credit for the amount due on their account and paying cash for the balance. 

On Apr. 25, the concern being in need of further capital to develop the business, the 
stockholders by mutual agreement, donated 20 per cent of the stock held by them, the same 
to be sold and the proceeds devoted to the business. 

On May 2, 20 shares of the donated stock were sold at par to C. W. Johnson for cash. 

On May 16, 10 shares of the donated stock were sold at 5 per cent below par to Arthur 
Williams, on his note at 30 days. 

Required Entries. 

When the statement of assets and liabilities of the former partnership is rendered and 
accepted and the stock issued, the following entry is made in the Journal: 


Plant 6567.80 

Mdse S250. 

Operating Products I2 75. 

Bills Receivable 426.50 

Harmon Leather Co 347-20 

Franchise 6420.90 

Bills Payable 157.90 

Union Market Co 129.50 

Capital Stock 20000. 


For inventoried assets and liabilities this day transferred by the firm of McCloud, Beil 
& Co. to “The McCloud Tanning Co.” in consideration of 200 paid-up shares of the stock of 
said corporation and which have this day been issued as per agreement to the members of 
said firm. 

In the foregoing entry no account is taken of the several partners’ accounts, since these 
do not appear in the corporation books. Notice that the amount charged to Franchise is the 
difference between the sum of the assets, and the liabilities plus that portion of the Capital 
Stock issued to the former partners. 

When the first installment is paid, the following entry is made on the debit side of the 
Cash Book : — 

Subscription 1875 

For cash installment (No. 1) by N. S. Brown, Chas, Hallor- 
an, C. S. Atkins, and A. L. McGuire per entries in Installment 
Book, this date. 

The Treasury Stock is provided for by the following Journal entry: — 


Treasury Stock ' 2500 

Capital Stock 2500 


For 25 shares Treasury Stock reserved. 

When the final installment on the subscribed stock is paid in, make debit Cash Book 
entry for portion paid in cash as follows : — 

Subscription 4500 

For Cash installment No. 2, bal. due on stock subscriptions of 
N. S. Brown, Chas. Halloran, and C. S. Atkins, per Installment 
Ledger this date. 


24 


CORPORATION AND VOUCHER ACCOUNTING. 


For the payment of remainder of A. L. McGuire’s subscription with note, the following 
J ournal entry is made : — 


Bills Rec 

Subscription 


1125 

1125 


For Installment No. 2, 75 P er cent of A. L. McGuire’s subscrip- 
tion of 15 shares paid with his' note of this date. 


Certificates of stock are then issued to the several subscribers, their accounts are closed 
m the Installment Ledger and opened in the Stockholders’ Ledger, and the following Tournal 
entry is made : 


Subscription 

Capital Stock 


7500 

7500 


■F' or 75 shares of paid-up subscription stock, issued this day as 
follows : — 


N. S. Brown, 
Chas. Halloran, 
C. S. Atkins, 

A. L. McGuire, 


20 shares. 
25 shares. 
15 shares. 
15 shares. 


When the twenty-five shares of Treasury Stock are sold to the Union Market Co., make 
the following Journal entry: — 


Cash 

Union Market Co 

Treasury Stock 


2370.50 

129.50 

2500. 


For 25 Shares Treasury Stock issued this day to 
Union Market Co. and paid for with offset of amount due 
them on our account, and cash per balance. 


When the stock is donated by the several stockholders, the following Tournal entry 
made: J 


Donated Stock 6 00 o 

Loss and Gain 6000 


was 


For 20 per cent of the capital stock contributed pro rata, by the 
several stockholders and this day assigned to the McCloud Tan- 
ning Co. to be sold for the benefit of the business. 


Note— Th is method of raising necessary funds is often employed instead of levying an ordinary assess- 
ment. Like an assessment, the stock donated constitutes a clear gain to the business, since it is an Acquired 
resource for which there is no corresponding outlay, and it is therefore debited and Loss and Gain is cred- 
. W "? ay ent 7 e d either at par or at its market value. The Donated Stock Account is credited when 

the stock is sold, and since it may be sold at variable prices, the account, when all the stock is sold may 
twT 3 credlt . balance >. according to whether it was sold for a greater or a less amount 

than that for which the account was originally debited. If a balance is shown when all the stock is sold the 
account is closed into Loss and Gain. 


When the 20 shares are sold to C. W. Johnson, the following entry is made in the Cash 
Book : — 


Donated Stock 


2000 


For 20 shares sold at par to C. W. Johnson as per Cer. No. 9. 

When the 10 shares are sold to Arthur Williams, the following Journal entry is made:— 

Bills Rec ^50 

Donated Stock 950 

For 10 shares sold at 5 per cent below par to Arthur Williams 
as per Cer. No. 10 on his note at 30 days. 


PRACTICE EXERCISES. 


25 


EXERCISES. 


Prepare entries (as specified) for each of the following schemes of Incorporation, re- 
ferring, if necessary, to previous instructions. 

Note USe loose Journal paper for the following exercises and make no entries in your blank books. 

Corporation No. 1. 

The Lawndale Manufacturing Co. is incorporated on Jan. 15, 1901, for $75000 (shares 
of $100). Of this amount $60000 is subscribed as follows: 

C. R. Smith, 

M. Wilson, 

L. W. Neal, 

I. N. Thayer, 

A. C. Hill, 

The remaining 150 shares are reserved as Treasury Stock. 

The subscription agreement is signed Jan 15. 

COn Feb. 1, Mr. Smith pays cash for his stock in full, and the remainder of the stock- 
holders pay a cash installment of 75 per cent. 

Mar. 1 they pay cash for the remainder, and their stock is issued. 

Apr. 15, 50 per cent of the Treasury Stock is sold at par for cash to C. W. Jones. 

July 15 - the remaining unissued Treasury Stock is retired. - 

Jan. 1, 1902, the books show net gains to the amount of $12569.50 from which a cash 
dividend of ten per cent is declared and paid. 

Write all Journal and Cash Book entries required, with dates and explanations com- 
plete, and close net gains into Dividend and Surplus Accounts, as previously instructed. 

Corporation No. 2. 

H. B. Scott has been conducting a wagon and buggy manufactory which is to be incor- 
porated under the name of The Scott Wagon & Buggy Co., as follows: — 

Capital Stock, $40,000 (400 shares). Mar. 1, 1901, C. F. Miller subscribes 100 shares, 
and A. B. Clark and T. M. Cook 50 shares each. H. B. Scott has issued to him the remain- 
ing 200 shares paid up, in consideration of his transferring to the corporation the plant and 
equipment which are put in at the full valuation of the shares, $20000, and to be repre- 
sented on the books by an account with “Plant and Equipment.” 

Mar. 5, C. F. Miller pays cash for his shares, and on Apr. 1, A. B. Clark and T. M. 
Cook, respectively, pay their subscriptions, one half in cash and their notes at 90 days for 
the balance. 

July 1, the stockholders donate 10 per cent of their stock to be sold for the purpose of 
increasing the working capital. 

July I 5 > 40 per cent of the donated stock is sold at par to R. B. Bryan for cash. 

Aug. 1, the remainder of the donated stock is sold to A. P. Lane, at 5 per cent above 
par. Mr. Lane pays $2000 in cash and his note at 30 days for balance. 

Dec. 1, the business shows a net profit of $3241.50, from which a cash dividend of five 
per cent is declared and paid. 

Make complete Journal and Cash Book entries for all transactions and closings. 


200 shares. — - 
125 shares. 

1 50 shares. 

75 shares. 
5q_shares. 
TTT" 


26 


CORPORATION AND VOUCHER ACCOUNTING. 


Corporation No. 3. 

S. B. Marvin, L. Seymour and R. W. Evans have been conducting a grocery business 
under the firm name of S. B. Marvin & Co. They decide to incorporate the business under a 
capitalization of $30000, (600 shares of $50 each.) The corporation to be known as “The 
Western Grocery Co.” 

For their present interest in the business, the partners are to receive stock as fol- 
lows : — 

S. B. Marvin, 150 shares. 

• L. Seymour, 175 shares. 

R. W. Evans, 75 shares. 

h 0 0 

One hundred shares are to be taken by A. B. Snow and to be paid for in Cash, and the 
remaining one hundred shares are to be reserved as Treasury Stock. 

The above arrangement was effected and the shares issued May 1, 1901, and on this 
date the books of the partnership were closed, and then re-opened under the incorporation 
in accordance with the following statement : — 

RESOURCES. 


Cash 1565.20 

Mdse. (Invt. stock on hand) 8592.40 

Personal Accounts (per schedule) 4221.60 

Bills Receivable (notes on hand) 2567.25 

Chattels & Fixtures (Invt.) 7 59.20 


LIABILITIES. 


Per. Accts 657.40 

Bills Payable (notes and acceptances) 540-55 

L. Seymour, Partner 6621.25 

S. B. Marvin, Partner 6564.30 

R. W. Evans, Partner 3322.15 


17705.65 17705.65 


July 1, one half of the Treasury Stock is sold at par for cash to Henry Warner. 

Aug. 1, 30 shares of Treasury Stock are sold for cash at 2 per cent below par to Chas. 
Morton. 

Sept. 15, the remainder of the Treasury Stock is sold at 5 per cent premium to T. S. 
Brown, on his note at 60 days. 

Jan. 1, 1902, the books of the concern show a net gain of $3327.40 which is closed into 
Surplus, and a cash dividend of 5 per cent is declared and paid. 

Mar. 1, 1902, a second dividend of 6 per cent is declared and paid in cash. 

Give all Cash Book and Journal entries required to open the corporation books, also 
those relating to the treasury stock and to the dividends. 


GENERAL REVIEW. 


27 


General Review Quiz. 


To the Student: Prepare yourself to answer fully all the following questions. See 
how many you can answer without re-reading any of your previous instructions. If, how- 
ever, you are in doubt as to the correct answer to any question, refer to the text again and 
study the matter carefully. 

When you feel that you are prepared to answer all the questions, report to your teacher 
who, if he is satisfied that you are ready to proceed with the actual accounting course, will 
direct you to commence with the work of the Central Canning and Drying Co., page 29. 


fi- 

d- 

s' 

6 . 

' 7 - 
8 . 

9. 

10. 

11. 

12. 
ifi- 
14. 
IS- 
16. 
i7- 

18. 

19. 

20. 

21. 

22. 
2 3 - 

24. 

25- 

26. 

27. 

28. 

29. 

30. 
31- 

fi 2 - 


33 - 

34 - 

35 - 

36. 

37 - 

38. 

39 - 


Define a corporation. 

What is a charter? 

What constitutes the charter of an ordinary commercial corporation? 

Give an example of a public corporation. 

Name the three classes of private corporations. 

How are the powers and liabilities of corporations regulated ? 

Define corporation stock. 

What is a stock subscription agreement? What should it set forth? 

What is a promoter? 

What is the purpose of a minute book, and by whom is it usually kept? 

How is the correctness of minutes verified? 

May a company be formally organized before all the stock is subscribed? 

What general facts should be set forth by the articles of incorporation? 

What procedure is usually necessary to give a corporation legal existence ? 

Name the general powers usual to corporations. 

Explain the voting rights of incorporators. 

Name the usual liabilities of corporations and their stockholders. 

With respect to the liability of stockholders, corporations are divided into what 
three classes? Define each. 

What are dividends, and how are they distributed? 

What are assessments, and under what circumstances are they usually levied ? 
What is an installment? 

Should a stockholder fail to pay an installment, what procedure may be taken ? 
What do you understand by common stock? Preferred stock? Guaranteed 
stock ? Donated stock ? 

What class of stock usually has the most stable valuation? Why? 

What is a franchise? Give an example. 

What is a bonus? 

What are bonds ? (Securities? 

Explain the meaning of the word “fund” as used in corporation affairs. 

Distinguish between “close” and “open” corporations. 

The books required to be kept in corporation business are divided into what two 
general groups? 

What is the purpose of an installment book ? 

Under what circumstances in the formation of a corporation would stock subscrip- 
tion and installment books be required? When would special stock subscription 
and installment books be unnecessary ? 

What is meant by installment scrip? 

What does the debit side of the Installment Ledger show ? The credit side ? 

What procedure is taken when a stockholder makes a final payment of his stock 
subscription ? 

LTnder what circumstances would an account in the Installment Ledger be closed? 
What is a stock certificate? 

When should an account be opened in the Stockholders’ Ledger ? When closed ? 
What procedure is necessary when an installment certificate is transferred? When 
a stock certificate is transferred? 


28 


CORPORATION AND VOUCHER ACCOUNTING. 


40. What should the balance of an account in the Stockholders’ Ledger always show? 

41. If a stockholder transfers an installment certificate, does he escape liability for the 
remainder of his stock subscriptions? 

42. May a stockholder escape liability for corporation debts by selling or transferring- 

his stock certificates? s 

43. By whom are corporation by-laws usually adopted? 

44- Under what circumstances may the books be temporarily closed against stock 
transfers ? Why is this necessary ? 

45. If a stockholder fails to pay an assessment, what procedure may be taken? 

46. How are stockholders usually notified that an assessment has been levied ? 

4 7 - Under what circumstances and by whom may dividends be declared ? 

48. Describe the procedure necessary when a dividend is to be declared ? 

49. What disposition is usually made of treasury stock that is not to be sold for the 
benefit of the corporation? 

50. How is a stock subscription agreement usually certified ? 

51. What officials usually have the management of the corporation affairs? How is 
their authority limited? 

52. How can a stockholder transfer a portion of the shares represented by a stock cer- 
tificate ? 

53. When does the installment ledger cease to be active? 

54. How do corporations usually raise needed money, in case it is not desirable to lew 

an assessment? J 

55. What is the purpose of the “Surplus” or “Reserve” Fund? Does it represent a re- 
source or a liability on the books ? 

56. How are dividends usually paid ? 

57- What entry is made when a cash payment is made on a stock subscription ? 

58. What does the Subscription Account represent? When is it finally closed? 

59. Should an assessment account be treated as a loss or a gain, when the books are 
closed ? 

60. For what purpose is treasury stock usually reserved when the corporation is or- 
gamzea. 

61. When a cash dividend' has been declared, what entry should be made? 

62. What entry is made when dividends are paid in cash ? 

63. When would a dividend account be in balance? 

64. What entry should be made when $25000 in Treasury Stock is reserved ? When 
it is sold for cash at 2 per cent below par? At 5 per cent above par? 

65. What entry is made when Treasury Stock is retired? 

66. What is the purpose of the Franchise Account ? 

67. When a partnership is incorporated, partners’ accounts are closed into what ac- 
count ? 

68. When an installment is paid by note, what entry should be made? 

69. When the incorporators contribute their own stock to be sold for the benefit of the 
business, what entry is required? 

70. Suppose the second dividend declared by the company were made payable in treas- 
ury stock, what entry would be required ? 


ORGANIZATION C. C. & D. CO. 


29 


Organization and Business Transactions of the Central Canning 

and Drying Company. 

To the Student: In this course of practice in corporation bookkeeping, it is as- 
sumed that the firm of Douglas, Fenton & Co. have been conducting a canning and drying 
business at Hillsdale, O., and in order to enlarge their capital and further develop their busi- 
ness, have decided to incorporate under the name of The Central Canning and Drying Co., 
which concern is to be organized and conducted as set forth in the memoranda that follows. 
It is also assumed that you are to act as Secretary and bookkeeper for the company. 

The various books and accounting methods to be employed will be described and illus- 
trated as they are required. You are to be a subscriber for 125 shares of the corporation 
stock, and you are to use your own name in all entries, etc., where the word “student” is 
used. 

Memoranda ( Beginning July 1, rpoi.) 

An informal preliminary meeting of the proposed incorporators is held at the office of 
Douglas, Fenton & Co. Present: Chas. T. Fenton, James Douglas, Geo. P. Morton, A. F. 
Hanlon, L. M. Barnes, and Student. 

Mr. Fenton is chosen temporary chairman, and Student, Secretary. 

General and informal discussion of plans for forming corporation. 

Motion by Mr. Douglas that a committee of three be appointed by the chairman to pre- 
pare plan of proposed organization, said committee to render its report to the proposed in- 
corporators at a meeting to be held July 6, at 7 :30 p. m. Motion carried unanimously. Chair- 
man appoints the following persons to serve on said committee: James Douglas, Geo. P. 
Morton, and Student. Meeting adjourned to meet at same place, July 6, at 7:30 p. m. 

Write in your Minute Book, in due form, the minutes of this meeting. 

July 6. 

Meeting to hear report of committee on organization. This report, as submitted and 
adopted by vote, is as follows : 

1. That a corporation is to be formed under the laws of the State of Ohio, and to be 
known as “The Central Canning and Drying Company,” the business of which is to be the 
canning, drying, or otherwise preserving of fruits, vegetables, meats, or other food products. 

2. That the company is to be capitalized for $250,000 in shares of $100 each. 

3. That $200,000 of the stock is to be subscribed for at once, and $50,000 to be re- 
served as Treasury stock and sold hereafter, or retired, as may be determined by the man- 
agement. 

4. That $100,000 of paid-up shares are to be issued to the members of the firm of 
Douglas, Fenton & Co. of Hillsdale, Ohio, as follows : 

Chas. T. Fenton, 375 shares. 

James Douglas, 250 shares. 

A. F. Hanlon, 250 shares. 

L. M. Barnes, 125 shares. 

These shares are to be issued to said persons as a full equivalent for their respective in- 
terests in the common property and business belonging to said firm, located at Hillsdale, 
Ohio, and which, after its organization, is to belong to the Central Canning and Drying Co. ’ 

5. That upon the subscription of the remaining $100,000 of the capital stock by re- 
sponsible persons, the incorporators here present’; bind themselves to the formation of the 
proposed incorporation in accordance with the terms herein set forth. 

After some general discussion, the report of the committee, as above outlined, was 
adopted by unanimous vote. 

The Secretary was then, on motion, instructed to draw up a stock subscription agree- 
ment in accordance with the foregoing terms, and a committee consisting of Geo. P. Morton 
and L. M. Barnes was appointed by the chair to circulate this subscription agreement for the 
purpose of securing the required subscribers for the proposed capital stock. Meeting then 
adjourned subject to the call of the chairman. 


30 


CORPORATION AND VOUCHER ACCOUNTING. 


Write up the minutes for this meeting, which should include a full and formal report 
of the committee. See page 9. 

Draw up the Stock Subscription Agreement, and subscribe your own name, after whicn 
your teacher will have the remaining signatures attached, which represent the persons, 
whom it will be assumed have duly subscribed for the number of shares set opposite their 
names. For form of Agreement see Note, page 10. 

Student, 125 shares. , Henry T. Bell, 75 shaies. 

Geo. P. Morton, 200 shares. Arthur Moore, 250 shares. 

J. S. Miller, 100 shares. E. P. Moody, 175 shares. 

John A. Martin, 75 shares. 


July 12. 

The canvassing committee having reported that the required stock subscriptions had been 
obtained, the Chairman called a meeting of the incorporators to take steps for the legal for- 
mation of the coiporation. 

After some general discussion, the Secretary was directed to draw up Articles of In- 
corporation in accordance with the terms already agreed upon, adding such other details as 
might be necessary and submit the same for adoption by the incorporators. 

The following officers were then elected for the first official term, beginning with the 
formation of the corporation and ending July 1, 1902 : 

President — A. F. Hanlon. 

Vice President- — Geo. P. Morton. 

Secretary — Student. 

Treasurer — James Douglas. 

Directors — A. F. Hanlon, Geo. P. Morton, Arthur Moore, James Douglas and Student. 

Meeting then adjourned to re-convene at the same place on July 15 at 7:30 p. m. 

Write the minutes for this meeting, after which, prepare Articles of Incorporation fol- 
lowing in a general way the form given on page 10, but observing the terms as agreed upon 
and set forth in the minutes. Fix the time of incorporation at twenty-five years, and the 
place of business, Hffi'sdale, Ohio. After preparing the Articles of Incorporation, submit 
the document to,yfmr teacher for inspection, who will have affixed the signatures of the in- 
corporators. 

Note — In the case of an actual corporation, it would now be necessary to forward the Articles of Incor- 
poration po the Secretary of State for registry, and perhaps also to the Clerk, or Recorder, of the county in 
which the incorporation is formed. In the case of your present work, it will be assumed that this has been 
done, and that the necessary fees have been paid personally by the Secretary. An itemized list of these pre- 
liminary expenses will be given later. 


July 20. 

The corporation having received its charter (the Articles of Incorporation as returned 
with the Certificate of Registry by the Secretary of State) and having therefore attained to 
a legal existence, a meeting of the Board of Directors was held at which the following busi- 
ness was transacted : 

1. The Board was organized by the election of A. F. Hanlon as President and Student 
as Secretary. 

NojE-^-The president and secretary of a corporation usually serve, respectively, as president and secre- 
tary t>f the Board of Directors. 

2. A committee, consisting of James Douglas, Geo. P. Morton, and the student, was 
appointed to draft By-Laws for the government of the corporation. 

3. It was voted to call for the immediate payment in cash of an installment of twenty- 
five per cent of the subscribed stock. 

4. The Secretary was directed to issue certificates of stock to all persons entitled to the 
same, as required by the Stock Subscription Agreement, also to secure and open a set of cor- 
poration books. 

5. The following employes were elected, with salaries as specified : 

Superintendent, L. M. Barnes, salary $2,500 per year. 

Secretary and Accountant, Student, salary $2,000 per year. 

Auditor and Treasurer, James Douglas, salary $2,000 per year. 

Time Keeper and Clerk, J. M. Davis, salary $1,500 per year. 


VOUCHER SYSTEM. 


31 


salary $2,000 per year, 
salary $1,500 per year, 
salary $1,500 per year, 
salary $1,200 per year. 


Buyer, E. P. Moody, 

John A. Martin, Traveling Salesman, 

Charles Baker, Traveling Salesman, 

A. W. Long, Traveling Salesman, 

Meeting adjourned subject to call of chairman. 

Write up, in due form, the minutes of this meeting, after which make out the required 
stock certificates for each of the stockholders, who are entitled to receive paid up stock, and 
deliver the same, through the envelope marked “Stock Certificates Delivered.” 

Open accounts in the Stockholders’ Ledger with these stockholders, crediting each with 
the number and amount of shares issued. Index these accounts at the time you open them. 
For form of stock certificate and Stockholders’ Ledger see pages 15 and 16. 

The Operating BooKs of the Central Canning and Drying Co. 

The operating books for this business include a Journal, Sales Journal, Cash Book, 
Voucher Payable Register, Petty Expense Book, General Ledger, and Sales Ledger. 

The first four of these are what are known as “special column books” and are adapted 
to the peculiar requirements of this business. The student should bear in mind that all large 
business concerns adopt methods of account-keeping and the forms and kinds of record books 
that are best adapted to the special requirements of their own business. One of the purposes 
of the present course is to familiarize the student with the more usual methods by which this 
is accomplished. 


The following pages include forms and descriptions of the operating books to be used. 
You will study these books and their descriptions only as you are directed to do so in the 
memoranda of transactions, which are continued on page 40, and to which you will now re- 
fer for a continuation of your work. 


The Voucher System of Accountancy. 

I his is a system that has come into use in recent years, and is particularly adapted to 
large industrial and manufacturing concerns, electric lighting and street car plants, etc. 

It dei ives its name from the fact that accounts with certain classes of creditors are kept 
by means of receipted records called Vouchers, used in connection with a specially ruled 
book called a Voucher Payable Register. When payments are made on account of purchases 
or other expenditures, a voucher is issued and delivered to the person or firm to whom pay- 
ments are made, together with the cash, check, note, draft, acceptance, or other instrument 
through which the payment is made. The voucher is afterward signed and returned by the 
person or firm receiving the payment, and is placed on file as an evidence of such payment, as 
well as a memorandum of the expenditure. 

The form of voucher illustrated on page 32 shows that the Central Canning and Dry- 
ing Co. has purchased of the Cleveland Fruit Co. 185 bushels of peaches on Aug. 20, 1901, 
for which cash payment was made Aug. 24, 1901. 

The purpose of the stub is to preserve a record of the Voucher, should it be lost or not 
returned by the payee; also, to show the distribution of the amount paid arrtong the several 
department accounts, for entry in the Voucher Payable Register. By some concerns these 
entries are made on the back of the voucher, and by others they are not made at all, the 
Voucher Register record being deemed sufficient. The use of the stub is more convenient, 
however, if the itemized records on the voucher are considered necessary. 

When goods are purchased on account, the voucher is duly made out, but is not de- 
tached from the stub and delivered for signature '.until payment is made. 

In case the invoice includes a large number of items, these are not entered on the 
voucher, but the amount only is recorded with an entry in the description column, “As per 
Invoice No. 17, rendered Jan. 10, 1901.” 

Some concerns use vouchers for practically all expenditures required in the business, 
others use them only for certain classes of payments, as for material purchased for use in 
manufacturing processes, etc., and the cost of which it is desirable to keep in separate ac- 
counts. Vouchers are used either for cash or time purchases; if for the latter, the voucher 
is usually made out at the time the goods are received, and the bill verified, but is not for- 
warded to the creditor until the time of payment. In your present business, you will use 
vouchers for all purchases of material, also for other classes of expenditure as indicated in 
the memoranda. 


VOUCHER 


32 


CORPORATION AND VOUCHER ACCOUNTING 



Please fill out, sign, and return this Voucher PROMPTLY, 


OPERATING' BOOKS. 


33 


JOURNAL. 





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34 


CORPORATION AND VOUCHER ACCOUNTING. 


VOUCHER PAYABLE REGISTER. -LEFT FOLIO. 




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Voucher Payable Register. 

This book contains a properly classified record of all payments evidenced by the vouch- 
ers. There are special columns for the various classes of materials purchased, also columns 
for Labor, Fuel, General Expense, or any other classes of expenditures of which it is desir- 
able to keep separate records. 

The accompanying form of Voucher Payable Register is especially adapted to the busi- 
ness that is carried on by the student in the present course, but it must be borne in mind 
that the form of the book, the number of columns, etc., would vary with the nature and ac- 
countancy requirements of the business. 

The columns under “Canned Goods Accounts” present four accounts which are to be 
kept in the General Ledger, and which may be designated “C. G. Raw Products,” “C. G. 
Labor,” etc., to distinguish them from the corresponding accounts of the Dried Fruit Depart- 
ment. The totals of the several money columns are forwarded to the next page as soon as 
any page is full. Periodically (usually at the end of each month) the totals are posted to the 
Ledger. 

The purpose in keeping these several accounts is to enable the management to know at 
any time the total cost of each department of the business, which knowledge may enable them 
to reduce cost of production. In large concerns where there are many departments of cost 
and finished product, it is usual to keep separate ledgers for the different departments, but in 
your present business, it will be sufficient to keep separate cost accounts in the General 
Ledger, and close these into the general department account. 

Instructions will be given hereafter as to the manner of making these closings and in- 
ventories. 


OPERATING BOOKS. 


35 


VOUCHER PAYABLE REGISTER.— RIGHT FOLIO. 


Cann 

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As your course does not involve the use of business papers other than the vouchers and 
invoices, you will not make out the checks that should accompany the vouchers, but will 
merely assume that they have been duly made out and delivered with the voucher. In actual 
business, of course, the check would eventually be returned by the bank upon which it was 
drawn, while the voucher would be receipted and returned by the firm to whom it was issued. 

Disposal of Vouchers. When a voucher is received by a payee, if the check or 
other remittance accompanying it be correct, the check should at once be deposited for col- 
lection, and the voucher should be filled out properly and returned to the firm that issued it. 
When a receipted voucher is received, it is at once placed on file. 

Note— I n some offices, when the check used to pay a voucher is returned by the bank, it is attached to 
the voucher and filed with it. We do not see, however, tfi at this course is necessary, and so far as our in- 
vestigations extend, but few houses follow it. The voucher itself is a sufficient receipt, and it seems unneces- 
sary to interfere with the usual order of disposing of returned checks. 

In your present work, as you are not dealing directly with real persons, you may simply 
make out the voucher in proper form (using the book of vouchers included with your office 
stationery) and deliver it through the envelope marked “Vouchers Payable Delivered.” Your 
teacher will instruct you as to the final disposal of these vouchers at the end of the week’s 
business. In actual business they would be receipted and returned by the parties to whom 
they are issued, and then re-attached to their original stubs. 


36 


CORPORATION AND VOUCHER ACCOUNTING. 


The Journal. 

The form on page 33 illustrates the Journal that is to be used in this course, and the 
method of using it. The form differs from that of the ordinary Journal, only in the intro- 
duction of the column for Sales Ledger Credits. 

Sales Ledger Credits Column. In this business, a separate ledger called a 
“Sales Ledger” is to be kept for all our accounts with customers. To enable us to know at 
any time the state of this Ledger as a whole, \we carry special columns in the several books, 
for the debits or credits that go to this ledger, and keep a “Sales Ledger Account” in the 
General Ledger, to which the footings of the Sales Ledger Columns are posted at the close 
of each week. The “Sales Ledger Credits” column in the Journal is for any credits other 
than cash (such as notes, memoranda of credit, or the like) and which are not recorded in 
the other books. 

Recording Sales of Merchandise. 

Duplicate Bill Pad. In this business, the Sales Book is dispensed with, the item- 
ized records of sales being kept in duplicates of the bills sent to the customers. This is done 
by means of a specially prepared bill pad with carbon copying sheet. In preparing duplicate 
bills, follow the directions on the cover of your Duplicate Bill Pad. 

Sales Journal. This book contains columns for the names and addresses of all per- 
sons to whom goods are sold, and whose accounts are to be kept in the Sales Ledger, also 
columns for the date, terms, amounts, etc. Separate columns are used for “Canned Goods” 
and “Dried Fruit.” The “Sales Ledger Debits” column is for the amounts of the several 
purchases, and at the end of each week its total is posted to the debit side of the Sales 
Ledger Account in the General Ledger. The totals of the “Canned Goods” and “Dried 
Fruits” columns are posted to the credit side of the respective accounts in the General 
Ledger. 

The separate amounts in the “Sales Ledger Debits” column are posted to the customers’ 
accounts in the Sales Ledger. See page 3 7. 

The Quotation Lists. The output, or product, of manufacturing establishments 
is usually sold to large wholesalers or to jobbers, who in turn sell the goods to local dealers. 
The prices and terms will vary with the quantity purchased, the rise and fall of the market, 
etc. 

In the present business, the manufactured product consists of various brands of canned 
and dried fruits, jams, jellies, etc., which are designated in the Quotation Lists, and which are 
to be sold at the prices and terms given unless otherwise specified in the memoranda. Two 
cards — “Quotation List No. 1” and “Quotation List No. 2” — will be found in your book- 1 
keeping equipment. The first of these is to be used until its use is discontinued and “Quo- 
tation List No. 2” is substituted for it, as directed in the memoranda. “Canned Goods” 
includes the several brands of canned fruits and vegetables, jams, jellies, etc., while the two 
grades of dried apples, pears, and peaches, are included under “Dried Fruits.” In using the 
Quotation Lists, take extreme care to enter the proper prices and articles as required by the 
memoranda. 

Terms of Sale. Most of the sales in this business are made at “list terms,” that is, 
on 60 days credit at the prices given on the Quotation List, with a discount of 2 per cent off 
for Canned Goods and 1 per cent for Dried Fruit, provided the purchases are paid for in 
cash, or its equivalent, within 30 days. Other sales, however, are made at special terms and 
prices. The terms of sale should always be entered plainly in the blank spaces left for that 
purpose, at the top of the bill. To secure brevity in entering these accounts, use certain sym- 
bols and abbreviated expressions, to indicate different kinds of terms. Following is a list of 
them with their meanings as they are to be used in your present work : 

Net: amount of bill to be paid without further discount. 

n/30; net amount of bill to be paid within 30 days. 

2/30; two per cent off if paid. within 30 days. 

1/30 n/60; one per cent off if paid for in 30 days; amount of bill to be due in 60 

days. 

Cash, C. O. D., or Net Cash; goods to be paid for in cash as soon as received, 
and without further discount. 

[Continued on page 38.] 


OPERATING BOOKS. 


37 


SALES JOURNAL. 







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FORM OF BILL. 

THE CENTRAL CANNING AND DRYING COMPANY, 

MANUFACTURERS OF 

CHOICE DRIED AND CANNED GOODS, 

Jams, Jellies, Preserves, Etc. 

Sold to Hartley & Adams Shipped per B. & O. Ry. 


Fremont, Ohio. 

Terms: Canned Goods 2/30 n/60 Dried Fruits 1/30 n/60 Hillsdale, Ohio, Au S- 6 < 190 1 



125 

Cs. Stan. Peaches 

1 

15 

143 

75 




75 

Bx. Dried Ap. (3750 lb.) 


06 

225 





40 

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1 

60 

64 





40 

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46 

532 

29 


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38 


CORPORATION AND VOUCHER ACCOUNTING 


CASH BOOK.-LEFT FOLIO. 


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Cash Less 5; five per cent off if goods are paid for in cash. 


now . the . general rule in business that cash terms are allowed, provided payment for a ship- 
ment of goods is made within 30 days of the billing date. p y d bnlp 

Spot Cash; goods paid for at time of purchase, usually employed where goods are de- 
livered at seller s warehouse, at the time of purchase. 

,, Abbreviations. Convenience and economy require that, in billing, certain special 
abbreviations be used to indicate the articles sold. There are no definite rules as to what 
these abbreviations shall be; each bookkeeper exercises his own taste and judgment. The 
symbol chosen should be definite, however, and so characteristic of the word abbreviated 
that the buyer will have no difficulty in knowing what article is meant. The abbreviations 
given m your Quotation List are such as would probably be used by a billing clerk, and you 
should use these or similar ones in your own billing. 


What to do When a Sale is Made. 

1. Referring to the quotation list, enter the purchase with the date, and the terms and 
the proper prices, on the bill, being careful to follow the directions on the cover of your Dupli- 
cate Bill Pad. On a sheet of loose paper, compute the amounts, (and discounts, if any are 

uu-n a ^ the time the blU 1S rendered )> after which enter the extensions and amounts on 
the bill. Be especially careful to take the correct prices, as given on the Quotation Lists 
and prove all computations before entering the amounts on the bill. In columnar bookkeep- 
ing, errors in billing if allowed to occur, will cause much annoyance, and extra work. 

If a payment is made, either whole or in part, at the time a purchase is made, credit the 
payment at the bottom of the bill, as shown in the model form on page 37. 

2. When the bill is prepared, remove it by tearing along the perforated line, and deliver 
to the customer through the envelopes marked “Bills Rendered.” Place the carbon copying- 
sheet under the next white bill, copying surface downward, in order that it may be in position 
when another bill is to be made out. 

3- Enter the sale in the Sales Journal as shown in the model form on page 37, being 
careful, if the sale consists of both dried fruit and canned goods, to enter the proper amounts 
in these columns. If the goods are sold at regular list terms, it will be sufficient to write the 
word list in the terms column. 

Should a sale be paid for at the time the order is given, which sometimes occurs it is 
nevertheless entered on the Sales Journal and carried to the customer’s account, the same 
as a time sale. In a manufacturing or wholesaling business, it is important to keep records 
of all sales, whether for cash or on account. 


OPERATING BOOKS. 


39* 


CASH BOOK.— RIGHT FOLIO. 


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Care should be taken to enter in the Cash Book or Journal as the case may require, and 
at the time the Sales Journal entry is made, any payments that may have been made to apply 
on the purchase. 

The Cash Book. 

The accompanying form illustrates the Cash Book to be kept in this business. Notice 
that there are three debit and three credit money columns, which are to be used as designated 
by the printed headings. The totals of the several special columns are posted to the respec- 
tive accounts in the Ledger whenever it may be necessary. When a page of the Cash Book 
is filled, the several totals are forwarded to the next page. If desirable, the Cash columns 
may be balanced at any time, and without footing up and posting the special columns. 

When the totals of the special columns are posted, the Ledger folio is entered in small 
figures just above (or below) the amounts, as shown in the form. 

Petty Expense Book. 

In conducting a business office, there are f requently small expenditures, which it is in- 
convenient to keep account of in the General Cash Book, with a regular entry for each trifling 
expenditure. Instead of doing this, the minor office expenditures are provided for by a 
special fund known as a “Petty Expense Fund” which is set apart for the purpose, and 
which is in the personal charge of the bookkeeper or office clerk whose business it is to make 
the expenditures. These are recorded in a special book called a Petty Expense Book. When 
cash is set aside for petty expenses, the amount is entered on the debit side of this book, and 
credit entries are made for all expenditures as they occur. An account with “Petty Expense” 
is kept in the General Ledger, and at the time cash is reserved for petty expenses, an entry 
is made on the credit side of the Cash Book, charging this account with the amount reserved. 
When the books are closed, any unexpended balance belonging to the Petty Expense Ac- 
count would be listed as a resource. 

The accompanying form illustrates the method of recording the entries in the “Petty 
Expense Book” and entering and forwarding its balances. 


PETTY EXPENSE BOOK. 


July 

5 

10 

12 

Cash Rec’d per Treas, Ck. No. 1 

Office Stationery as per Bill of Clarke & Sons 

Official Fees for Incorporation 

Messenger service delivering notices to incorporators 
Bat. 

25 



5 

12 

6 

25 

50 

75 

50 




25 



25 



15 

Bal. down 

6 

50 





40 


CORPORATION AND VOUCHER ACCOUNTING 


The Time Booh. 

In establishments where there, are a number of employees, accounts with these are kept 
in a book conveniently ruled for the purpose, and called a Time Book. In most business 
houses, employees are paid each week, and the Time Book here shown illustrates the time 
and wages as made out for the first week for a working day of eight hours. The first col- 
umn contains the numbers of the several employees, the next, the wages per day, and the 
succeeding columns, the hours worked each day according to the time-keeper’s book, the 
total number of hours for the week, and the amount due. In some Time Books there is a 
column in which the employee writes his name as a means of receipting for the money paid 
him, but this practice is seldom followed. 



Memoranda for July 20 [Continued from page ji) 

Study the description and form of Journal given on pages 36 and 33, after which, pre- 
pare your opening entry as required by the following statement of the resources and liabilities 
of the late firm of Douglas, Fenton & Co. at the time the business was incorporated. See 
the opening entry for McCloud Tanning Co. page 23. 

The six personal accounts listed among the resources are to be opened in the Sales 
Ledger, as they represent customers to whom goods have been sold on account. The amount 
of these accounts is to be posted direct to the Sales I. edge r Account in the General Ledger. 
The method of listing them in the opening entry is as follows : — 


Sales Ledger Account 
S. H. Arthur & Co., 
Stuart & Hall, 

C. H. Bell & Son, 
John Maxwell, 
Graham Grocery Co., 
Famham, Blair & Co., 


$ 425.30 

247 . 50 
321.15 
142.30 
456.80 

928.50 


2521 


55 


MEMORANDA FOR JULY 20. 


41 


Statement of Resources and Liabilities of Douglas, Fenton 6 Co., 

July 20, 1901. 


Resources. 


Plant, machinery, tools, etc 

Canned Goods, Unsold Stock 

Tinning and Casings, C. G. Dep’t. . 

Miscellaneous, C. G. Dep’t 

Dried Fruits, Unsold Stock 

Packing and Casing Dr. F. Dep’t 

Fuel X estimated) 

Bills Receivable, transferred 

Interest accrued on same 


Accounts Receivable as follows: 




S. H. Arthur & Co., Janesville, Wis. 

Stuart & Flail, Aurora, 111 

C. H. Bell & Sons, Munice, Ind. . . . 

John Maxwell, Clinton, la 

Graham Grocery Co., Hannibal, Mo. 
Farnham, Blair & Co., Hillsdale, O. . 


Liabilities. 


$75000.00 

2 59°-75 

248.15 

127.10 

526.20 

64.10 

175.00 

786.45 

65-5o 


425-30 

247.50 

321-15 

142.30 
456.80 
928.50^ 
v* V I 


r 0 

^ 7 6"° 

x\ 


0 


o 


A 



which, it should be posted to the several accounts in the General and Sales Ledgers. For con- 
venience, these books are bound together under one cover. The General Ledger consists of 
the first part of the book, which is ruled for half-page accounts, and the Sales Ledger the 
remainder of the book, the Sales Ledger Index separating the two. 

Page each Ledger separately before opening any accounts, beginning with the first page 
following the index. 

Open accounts in your Installment Ledger with the several persons who have sub- 
scribed for stock, debiting them for the number and amount of their shares, as shown by the 
Stock Subscription Agreement. (See Installment Ledger page 14). Then make out Install- 
ment List No. 1. Rule up a sheet of blank paper for this purpose, following the form of In- 
stallment Book given on page 13. Keep this list in your Installment Ledger, and make the 
required entries on it, and on the Installment Ledger accounts, whenever any of the install- 
ments are paid. 

The following persons have paid their installments (No. 1) in cash: E. P. Moody, 
John A. Martin, and Student. 

Make the required entries on the Installment List, after which, make out and deliver 
through the “Installment Certificate” envelope, the necessary Installment Certificates and 
make the required entries in the Installment Ledger. Refer to your Minute Book and the 
memoranda for the datings. 

Study description and form of the Special Column Cash -Book given on pages 38 and 
39 after which credit Subscription with the installments paid by Messrs. Moody and Martin 
and yourself, as in the entry for Jan. 7 in the Cash Book on page 38. 

Read description of the Petty Expense Book on page 39. 


42 


CORPORATION AND VOUCHER ACCOUNTING. 


Since you have been Secretary of the company it will be assumed that you have paid 
cash for incidentals out of your own personal funds, as follows : 

July io — Office stationery per bill of Clarke & Sons $ 5.25 

k July 12 — Official fees incident to incorporation 12. qo 

Tlllir TO "Do i A V T 1 1 ■ • , t 1 it . ^ 



a check for $25. 


Make the necessary entries in the Cash Book and Petty Expense Book. See entry for 
Jan. 7 in Cash Book, page 39. 

Read carefully all instructions relating to the voucher system of accounting on pages 
31 to 36, aftei which continue your work as given in the following Memoranda. 


Memoranda for July 27, 1901. 



Ledger. 


^ A. C. Tilford of Hillsdale, O., has delivered at the cannery 175 bu. of green peas at 30c. 
He presents buyer s tickets as evidence of the delivery. Make out a voucher for this pur- 
chase as follows: — Fill out the first voucher in your Voucher Book, following the form 
given on page 32. Also fill out the stub, entering the amount opposite Canned Goods, Raw 
Products. Then enter the voucher in the Voucher Payable Register, as shown in the entry 
for Voucher No. 1, on page 34. Assuming that the voucher has been paid, deliver it through 
the envelope marked Vouchers Payable Delivered,” and make entry on credit side of the 
Cash Book as in the entry for Jan. 8, page 39. 

“Voucher- - Qwdf r Book'” ^ ^ ° f ^ C ° UrSe t0 USe vouchers in the “Voucher Book” and not those in 

Issue a voucher in favor of McNeil & Clarke, Cincinnati, for their bill of July 16, for 
the following goods that have been duly received at the cannery. Terms, cash. 

15 Boxes “XXX” Tin Plates at $18.50 

12 Bo^es “Medium” Tin Plates at 15.25 

Enter on stub and in the Casing Column of the Canned Goods Account in Voucher 
Payable Register. See entry for Voucher No. 2, page 34. Make Cash Book entry as in 
previous voucher. 

Paid cash for postage stamps for office, $2. Enter in “Petty Expense Book.” 
v Geo. P. Morton hands you his check for payment of Installment No. 1. Issue Install- 
ment Certificate and make entry in Installment Ledger, Installment List, and Cash Book as 


heretofore. 


vlhe Acme Printing Co. of Cleveland, O., has delivered 5000 advertising circulars with 
their bill for same, dated July 20, $21.75. Issue and deliver voucher, charge “Gen. Expense” 
m \ oucher Payable Register, and make proper Cash Book entries as heretofore. 

vC. W. Wilson, Castleton, O., presents buyer’s tickets for 185 crates blackberries at 40c, 
delivered at cannery. Issue and dispose of voucher and make entries as in the case of the 
peas bought of A. C. Tilford. 

vS. H. Arthur & Co. remit N. Y. draft for $234.08 in payment of a bill of goods sold 
them on July 6 by Douglas, Fenton & Co., amounting to $246.40, on which they are entitled 
to a discount of 5 per cent. Make necessary Cash Book entries in “Sales Ledger Credits,” 
Mdse. Dis. Debits ’ and “Cash Debits” columns. See entry in Cash Book, page 38 for 
Jan. 8. 

Jy S. Miller pays Cash for Installment No. 1. Proceed as heretofore. 
v/T. J. Hart & Sons, Piqua, O., remit check for their note of Jan. 5 for $172.40 with ac- 
crued interest to date, $5.68. Credit “Bills Rec.” and “Interest” in Cash Book as in entries 
for Jain. 9, page 38. 

V J- Johnson, Hillsdale, O., presents Buyer’s Tickets for 68 bu. peas at 35c. Make 
out Voucher and dispose of transaction as in previous cases. 


MEMORANDA FOR JULY 27. 


43 


Read carefully all instructions under “Recording Sales of Merchandise,” pages 36 to 39, 
after which dispose of the following sales, observing carefully all instructions as to preparing 
and copying bills, making entries in Sales Journal, etc. (See “Abbreviations,” page 38.) 

V A. Monroe & Co., Elkhart, Ind. — 

50 cases Perf. Blk. ; 40 cases Pie Blk. ; 25 cases Perf. Peas; 10 cases Straw. Jam. List 
terms. See Sales Journal entry for Jan. 8, page 37. 

'-'Stuart & Hall, Aurora, 111. — 

25 Bx. Dia. Ap.; 15 Bx. Dia. Pears; 20 Cs. Perf. Cher.; 15 Cs. Cr. Ap. Jam. List 
terms. See entry for Jan. 4, page 37. 

Note — H ereafter in all sales of dried fruit, assume boxes to weigh 50 lbs. each. 

v O. C. Oliver & Co., Monmouth, O.— 

75 Cs. Pie Blk.; 30 Cs. Rasp. Jam; 30 Cs. Straw. Jam; 40 Cs. Straw. Jel. List terms. 
^Farnham, Blair & Co., Hillsdale, O.— 

100 Cs. Perf. Blk.; 25 Cs. each Straw., Rasp., and Cr. Ap. Jelly; 7c Bx. Dia. Ap. 
Spot Cash less 6 per cent. 


This is a sale to a local buyer who pays cash and receives a special discount of 6 per cent 
from oui legulai list prices. Such sales are rather unusual in wholesaling business; but 
since it is desirable to keep an account of all sales, they are entered in the Sales Journal, the 
same as a sale on account. Entries are made in the Cash Book as in the case of a payment on 
account. The buyer is charged for the goods ; the same as if he had bought them on ac- 
count and had then been credited for the cash payment with the discount added. See Sales 
Journal entry for Jan. 10, page 37, also Cash Book entry for Jan. 8, page 38. 


Note A question might be raised as to the necessity for making these several entries in the case of a 
cash sale, but it should be remembered that in a large wholesaling business, it is of much importance to keep 
complete records of every sale; the method here indicated is the one followed by most firms. 


/ C. W. Walker, of Arcade, O., presents buyer’s tickets for 69 tons of sweet corn at 
$ 4 - 59 - Make out, pay, and deliver voucher, as heretofore. 

yj. S. Miller has transferred his installment certificate to A. W. Nelson, of Monmouth, 
O., who is to assume Mr. Miller’s Stock Subscription. See directions for transferring in- 
stallment certificates pages 7 and 14, and proceed as there directed. 

v The Graham Grocery Co., Hannibal, Mo., have accepted, under date of July 23, and re- 
turned our draft drawn on them at 30 days’ sight for balance due us. See entry for Jan 6 
on page 33. 

vA. P. Harbinger & Sons, Cleveland, O., have rendered us a bill dated July 20 for spices 
bought foi Canning" Dept, amounting to $85.7°* upon which we are entitled to a discount of 
3 per cent. Make out and deliver voucher for the amount less discount. Itemize on face of 
voucher as follows : 


Lor Bill of July 20 $ 85.70 

Less 3 per cent. 2.57 


83-13 


\-Charge to “C. G, Miscellaneous Account,” on stub of voucher and in V. P. R. See 
Cash Book entry for Jan. 10, page 39. 

^A. T. Melville & Co., Indianapolis, order on our regular list terms as follows: — 

50 Cs. “Perf.” Peaches, 75 Cs. Standard Corn, 40 Bx. Orchard Apples, 2000 lbs. 

-The Brandon Co., Trenton, N. J., have delivered to us- 3 Davis Lruit Evaporators 
with equipment complete as per bill of July 22, $4265.90- We buy these machines at 30 
days. Make out voucher and required entries in Voucher Payable Register, charging pur- 
chase to Plant. As the voucher is not to be paid at once, allow it to remain in the Vouch- 
er Book until the expiration of the term of credit. See entry for Voucher No. 6, page 34. 

vThe Company Directors have authorized Arthur Moore to pay his installment with 
cash $2500 and his 30 day note at 6 per cent interest with approved security for balance. Is- 
sue the necessary Installment Certificate. See Journal entry for July 7, page 33. Enter 


44 


CORPORATION AND VOUCHER ACCOUNTING. 


the Cash item in the general column of the Cash Book, checking off the item in the Journal. 
No explanation in the Cash Book is necessary, write “J.” in the explanation column to show 
that the' item was entered from the Journal. 

kT he Company’s buyer, E. P. Moody, has purchased from various parties since the Com- 
pany was incorporated, products for the Canned Goods Dept, amounting to $1428.50, and 
for the Dried Fruit Dept. $967.25. He presents foremen’s receipts for the amounts of the 
several purchases and you are to issue a voucher, with check, to him for the full amount. 
Itemize in voucher as follows : 


For Purchases to date of Raw Prod, for Can. Dept 1428.50 

For Purchases to date of Raw Prod, for Dr. Fruit Dept 967.25 


2 39575 

Note — In the canning business, fruits, vegetables and other required raw products, are usually bought by 
contract from the growers, who deliver them from time to time at the Cannery, receiving weigher’s checks, 
which are presented at the office and paid. If the voucher system is not used, the proper accounts are 
charged in the Cash Book. In the present course, to avoid the issue of the large number of vouchers which 
would be necessary in accounting for these separate purchases of raw products, it will be assumed that most 
of them are made by the buyer, E. P. Moody, who personally pays for them, receiving at the end of each 
week a voucher with payment for the entire amount purchased for that week as shown by the foremen’s re- 


ceipts. 

' 4 lenry T. Bell pays cash for first installment of his stock. 

The B. & O. Ry. Co. freight bills to date are as follows : 

27 Bx. Tin, McN. & Co., Cin $ 3.75 

3 Bx. Spices, A. P. H. & Co., Cleveland 6.75 

Carload Machinery, The Brandon Co., Trenton. N. T 67.50 

— A'o o 


Issue voucher with payment, charging the items respectively to “C. G. Casing,”- “C. G. 
Miscel,” and “Plant” accounts. 


See entries for Voucher No. 9, page 34. 

^ote — A lways make out the voucher, with the pi 
I. P. R. 

/L. M. Barnes hands in Pay Roll for the week as follows: — 


Note — Always make out the voucher, with the proper entries on the stub, before making the record in 
the V. P. R. 


Canned Goods Dept., $1826.15; Dried Fruit Dept., $623.95. 

Issue voucher with payment in favor of Mr. Barnes, charging the amounts to the re- 
spective labor accounts. See entry for voucher No. 12, page 34. 

Note — In manufacturing concerns, the accounts with operatives, are kept by the time-keeper who usually 
makes his report, weekly, to the Superintendent in time for the hands to be paid off on Saturday evening. 
The pay roll, after being approved by the Superintendent, is passed to the proper office clerks who place in 
separate envelopes the exact amounts of money due the several employees. Sometimes the employees are 
required to sign the pay roll as a receipt, but this is not usual, especially in large establishments. Some con- 
cerns pay their employees on Monday for the work done the previous week. 

The form on page 40 illustrates a convenient method for keeping a time book, from 
which the pay roll is made out. 

Salaries have been paid for the week as follows : L. M. Barnes, $50 ; Student, $40 ; 
j. M. Davis, $30; E. P. Moody, $40; James Douglas, $40. Charge Gen. Expense in Cash 
Book, as in the entry for Jan. 9, on the Credit side of the Cash Book, Page 39. 

Note — Where there are several persons who receive their salaries regularly each week or month, it is 
unnecessary to keep individual accounts with these persons, since the checks when endorsed, constitute a 
sufficient record. If, however, salary payments are made irregularly, it is better to keep the individual ac- 
counts. 


A meeting of the Board of Directors was held on this date. Present a full board. 

Motion by Director Douglas that a further installment of 50 per cent, of the subscribed 
stock be called for, the same to be due and payable on or before Aug. 3, 1901. Carried by 
unanimous vote. 

Motion by Director Moore that J. A. Ryan be employed to act as night watchman, at 
the factory at a salary of $15 per week. Carried. 


MEMORANDA FOR JULY 27. 


45 


The chairman addressed the board on the importance of equipping the Cannery with im- 
proved machinery. Decided on motion of Director Morton that Supt. Barnes be instructed 
to make an immediate trip to Cleveland and Chicago for the purpose of investigating late 
canning machinery, prices, etc., and the feasibility of disposing of certain machinery that it 
is expected to replace. It was also decided that the foreman of the Cannery, C. W. Peters, 
is to act as superintendent during the absence of Mr. Barnes. The meeting then adjourned 
until August 3rd, at which time Mr. Barnes is expected to make his report. 

Record the proceedings of this meeting in the Minute Book, and make out Installment 
List No. 2. 

You will now post the books to date, observing with great care the following direc- 
tions : — 

1. Find the correct footings of the following special columns, recording them and 
making the proper rulings, as shown in the model forms as follows : — 

(a) “Sales Ledger Credits” Column in Journal, page 33. 

(b) “Sales Ledger Credits,” “Mdse. Dis.,” (Debits and Credits,) and “Voucher Pay. 
Debits” Columns in Cash Book, pages 38 and 39. ‘ 

(c) The three columns of the Sales Journal, page 37. 

Note — See that the totals of the “Canned Goods” and “Dried Fruit” columns together equal the total of 
the “Sales Ledger Debits” column. 

(d) All the money columns of the V. P. R., pages 34 and 35. 

Note — Prove the V. P. R., by ascertaining that the total of the “V. Pay. Cr.” column equals the sum of 
the totals of the other columns. 

2. Post the Journal. Be sure that all accounts with customers are opened in the Sales 
Ledger, and that every account is properly indexed when it is opened. Post the total of the 
“Sales Ledger Credits” column to the credit side of the Sales Ledger Account in the General 
Ledger. 

3. Post the Cash Book, omitting such items as were entered from the Journal, also, the 
credit items that record the payment of vouchers. Post the totals of the special columns of 
the Cash Book as follows : 

(a) The “Sales Ledger Credits” column to the credit side of the Sales Ledger Ac- 
count. 

(b) The “Mdse. Dis.” columns to the debit or credit side of the Mdse. Discount Ac- 
count, as indicated by the headings. 

(c) The “Voucher Pay. Debits” column to the debit side of the Vouchers Payable Ac- 
count. 

Note — In posting these special columns, you will need to observe great care that you do not enter them 
on the wrong side of the Ledger. 

4. Post the Sales Journal. The amount of each sale is to be entered on the debit side 
of the customer’s account in the Sales Ledger, and in making this entry always enter the 
terms of the sale in the explanation column of the Ledger. This will save the trouble of look- 
ing back through the Sales Journal when customers send remittances in payment of their pur- 
chases. 

Post the total of the “Sales Ledger Debits” column to the debit side of the Sales 
Ledger Account, and the “Canned Goods” and “Dried Fruit” credit columns to the credit: 
side of the respective accounts in the General Ledger. 

5. Post the Voucher Payable Register, as follows : Post the total of the “V. Pay. Cr.” 
column to the credit side of the Vouchers Payable Account, and the totals of all the other 
columns to the debit side of the several acccounts in the General Ledger. 

6. The correctness of the General Ledger is now to be proved by means of a Trial Bal- 
ance, with the method of preparing which, the student is assumed to be familiar. 

Following is a list of the accounts that should appear on your Trial Balance for July 
24. The several accounts of the Sales Ledger, of course, do not appear, as these are repre- 
sented by the Sales Ledger Account in the General Ledger. 

The balance of Cash should be entered on the debit side of the Trial Balance, but as 
errors in the Cash Book are likely to be found, it is well not to close and balance the Cash 
Book until after the correctness of the books has been ascertained. 


46 


CORPORATION AND VOUCHER ACCOUNTING. 


Cash. 

Capital Stock. 

Subscription. 

Franchise. 

Plant. 

Canned Goods. 

“ Casing. > 

“ “ Miscellaneous. 

“ “ Labor. 

Raw Product. 

Dried Fruit. 

Raw Product. 

“ “ Casing. 

“ “ Labor. \ 

Fuel. 

1 General Expense. 

Petty “ 

'V Mdse. Disc. 

Bills Receivable. 

Payable. 

Interest. 

_Sales Ledger. 

Vouchers Payable. 

Chi. Tinning. Co. 

Braile & McKnight. 

Ohio Lumber Co. 

7. When your Trial Balance has been submitted to your teacher and approved, balance 
and close the Cash Book, after which continue with the work as follows : 


Memoranda for Aug. 3. 

\A warehouse for storage of goods, etc., has been leased from B. T. Sloan, at a rental 

$75 P er month beginning Aug. 1, and one month’s rent has been paid in advance. Charge 
to Gen. Expense in Cash Book. 

✓ F. H. Lanning of Avon, O., has delivered at the Cannery, berries from his fruit farm as 
per buyer’s receipts, filed this day, $614.20. 

\/A. B. Halloway of Columbus, O., sends a “rush” order for 100 Cases “Perf.” Blk. at 
list terms. He requests us to send by U. S. Express and prepay charges. Include the ex- 
press charge, $28.60, in the bill and charge the item to “Canned Goods” in the Cash Book. 

vWe have sold R. C. Noble & Co., Sharon, Ind., at 30 days, 25 Cs. each of our Straw., 
Rasp., and Cr. Ap. Jel., and 50 Bx. Dia. Peach. This is a trial order and the buyers are to 
be allowed special discounts from list prices of 6 per cent on the Strawberry and Raspberry 
5 per cent on the Crab Apple Jelly, and 2 j 4 per cent on the Peaches. 

Indicate the rate of discount allowed on each item, when making out the bill, and deduct 
before entering the amount. 

not Srirf to rebat6S fr ° m PHCeS ' and giV6n t0 S6CUre trad6 ’ th6y are 

v A. B. Newell & Sons, Hillsdale, O., present their bill of July 22, for services in placing 
machinery and making various repairs in the plant, $72.10. Issue Voucher with payment and 
charge to Gen. Expense. 

-✓Withdraw $20 in cash, and charg'e to Petty Expense Fund. 

vM. F. Lee, Hillsdale, O., presents buyer’s checks for 23 tons Green Peas at $16. so and 
17^2 Green Beans at $12.50. 

Vparnham, Blair & Co. hand us $500 on account. 

Iir have received from Chicago Sugar Refining Co., billed at 2-30, n-60, a car load of 
Extra C sugar, 100 Bbl. (300 lb. ea.) at 514 c. 


MEMORANDA FOR AUG. 3. 


47 


'■Khxicher made out but not paid. Charge to “Canned Goods, Miscel.” 

,/fhe Ohio Lumber Co., Cleveland, O., present bill of Aug. i, for lumber purchased for 
casings (boxes for packing goods) $379.15. This lumber is billed at 30 days. $165.40 of 
the aijrount is for the Canned Goods Dept., and the remainder for the Dr. Fruit Dept. 

VC. A. Gregory & Co., Akron, O., order at regular list terms the following goods: 60 
Cs. Perf. Pears; 75 Cs. Stan. Cher.; 25 Cs. Perf. Ap. ; 75 Cs. B. Bk. Beans, and 18 Cs. 
Stan. Ap. B. 

vPcLHillsdale Loan & Trust Co. rent to Sept. 1, $375. (Gen. Expense — no voucher.) 

\Jme Student, Geo. P. Morton, A. W. Nelson, and E. P. Moody, pay cash due for Install- 
ment No. 2. 

H. Bell & Co., Mpnice, Ind., order at list prices, a car load of Dia. Peach., 800 boxes. 
They send their check for $1500, and are to be allowed 60 days in which to settle for the bal- 
ance of the invoice. Charge them in Sales Journal for full amount of the bill, giving them 
credit ip the Cash Book for payment. 

v-fme Hocking Valley Coal Co., Hillsdale, O., present their bill of July 29 for a car load 
of coal, 45000 lbs. at $1.70 per ton. Make out, pay, and enter voucher, charging to Fuel 
Account. 

C. Oliver & Co. remit check for their purchase of July 27, less 2 per cent. 

V*- Monroe & Co., Kokomo, Ind., order 12 Cs. each of Blk., Straw, and Cr. Ap. Jam; 
25 Cs. Perf. Peas, and 40 Bx. Dia. Ap. We have offered them 2)4 per cent, off for “spot 
cash.” and their order is accompanied by a check for a sum sufficient to entitle them to a 
credit oP $100. 

\/C. T. Melville & Co. ask for a Memorandum of Credit for a shortage of 3 Bxs. Orch. 
Ap. in our reecnt shipment to them, reporting also that six of the cases of peaches sent were 
“Standard” instead of “Perfection”, as ordered; these, however, they will retain if credited 
with the difference in cost. Journal entry; debit “Canned Goods” and “Dried Fruits” for the 
discrepancies and credit Sales Ledger Account, making full explanation. See Journal entry 
for Jam-8, page 33. 

yTlie Eagle Boiler Co., Cleveland, O., present their bill for boiler and trimmings, for 
use in drier, $485.60, also for setting up same and making connections, etc., $47.25. Is- 
sue and pay voucher and charge to “Plant.” ~ 

NoTEr-Hereafter, no special directions will be given as to entries, unless in the case of exceptional or 
difficuh/fransactions, 

VH. T. Bell, Arthur Moore, and J. A. Martin, have paid cash for the amounts due from 
them cm-Installment No. 2. 

traveling salesman, John A. Martin, sends in his expense bill for the week ending 
July 27, amounting to $47.50. He requests that we remit to him a check covering the 
amount of this bill, also $25 on account of salary. His request is complied with. 

Note — Commercial travelers usually send in weekly bills for their expenses, which amounts are remitted 
to them direct, but on account of their absence from the place of business, their salaries are not usually paid 
x regularly each week. For this reason it is convenient to keep personal accounts with them, crediting them 
periodically with salary due and charging them with all payments on account of salary. Their expense bills 
are paid and charged to “General Expense,” vouchers being made out as in the case of other bills. In the 
present case, charge Mr. Martin in the Cash Book with the $25 sent him on account of salary, and remit 
voucherxM 1 payment for the expense bill. In business, a separate check would be sent for each amount. 

vArthur Moore, having in contemplation the sale of a portion of his corporation interests, 
surrenders his two installment certificates, Nos. 7 and 14, and requests you to issue in their 
steacl two other certificates, one for 100 and the other for 150 shares. Take Mr. Moore’s 
certificates from the “Installment Certificate” envelope, cancel them, and attach to the orig- 
inal stubs, and issue him two new certificates for the amounts desired, each one covering in- 
stallments 1 and 2, or 75 per cent of the face. Credit him in the Installment Ledger for the 
amount still unpaid on the two certificates cancelled, and charge him with the new ones is- 
sued. . 

v-Mtead “Transferring Stock,” page 7, and see R. C. Venable’s Account in Installment 
Ledgeiypage 14. 

Quarles Baker, traveling salesman, reports traveling expenses for the week ending July 
27, $61.20, and A. W. Long reports expenses amounting to $41.15. Issue and pay the neces- 
sary vouchers and make entries as heretofore. 

v^tuart & Hall remit their check in payment of their purchase of July 27, less the speci- 
fied discount allowed on the two classes of goods covered by their bill. 


48 


CORPORATION AND VOUCHER ACCOUNTING. 


/ The clerk of the Board of Public Works, Mr. S. A. Balcom, presents a bill for our water 
rates fop' July amounting to $71.25. Voucher with payment, charge to “Gen. Expense.” 

V'Sold A. T. Melville & Co. at list terms, 75 Cs. ea. Straw., Rasp., Blk., and Cr. Ap. Jam, 
and 100 Bx. Orchard Peaches. 

p-Affhur Moore wishes to transfer to H. T. Bell Installment Certificate No. 16 for 100 
shares. Take the certificate from the Installment Certificate envelope, fill out the form on the 
back, and present it to your teacher who will sign for Mr. Moore. Cancel the certificate and 
attach to the original stub, then issue a certificate to the transferee for the required number 
of shapes. Make entries in the Installment Ledger as instructed on page 7. 

\X. P. Moody presents foremen’s receipts for $2462.25 for raw products purchased, 
$1756^40 of which is for the Cannery and the remainder for the Drier. 

Y/The B. & O. Ry. presents bills for freight as follows : — 

July 29, 100 bbls. Sugar, C. S. Ref. Co., 31250 lbs. at I 2 j 4 per cwt. 

July 31, 1 Car Lumber, O. L. Co., Cleveland $21.50 

Aug. 1, 1 steam boiler, etc., Eagle Boiler Co., Cleveland 34-20 

Make out and pay voucher. Charge the items of the bill to the proper accounts as indi- 
cated by the several shipments. Pro rate the item of freight on lumber between the drying 
and canning departments, on the basis of charges against these departments when the lumber 
bill was paid. 

Note— I n pro rating charges of this kind, exact mathematical accuracy is not required. Drop the cents 
and find the percentages as follows : — 

$165-1— $379 = 43. 5+or 44 per cent 

$21.50X44 per cent = $9.46. Freight charge to Canned Goods Casing Dept. 

0 — $9. 46 = $12.04. Freight charge to Dr. Ft. Casing Dept. 



\The pay roll for the week amounts to $1915.10 for the Canning Dept, and $681.50 for 
the Drier. Issue a voucher to the acting superintendent, C. W. Peters, charging the 
amounts to the respective labor accounts. 

vPay cash for salaries for company officers, same amounts as for week ending July 27. 

Post the books to date following previous instructions. Close Cash Book and prepare 
a Trial Balance for the Ledger, which you will submit to your teacher for Approval. 

Proceedings of a Called Meeting of the Board of Directors to Hear Report of 
Supt. Barnes Regarding the Purchase of New Machinery, Etc. 

VMr. Barnes made an extended verbal report, describing the various cannery plants he 
had visited and making recommendations as to the changes in the present plant and machin- 
ery which seemed to him desirable. The plans proposed would involve an expenditure of 
from $60,000 to $75,000, and enable the capacity of the cannery to be doubled. 

^Lengthy discussion of Mr. Barnes’ report. 

cGommittee consisting of directors Martin, Douglas, and Moore, was appointed to co- 
operate with Mr. Barnes, and take immediate steps to enlarge the plant and provide it with 
improved machinery in accordance with his suggestions. 

/A call was made for payment of the third and final Installment of Subscribed Stock, the 
same to be due on or before Aug. 1 7. 

- The Secretary was instructed to investigate the present condition of the Company’s in- 
surance policies, and to arrange for increasing the same. 

The Secretary was also requested to prepare and submit at the next meeting of the 
Board, a code of By-laws for the government of the Corporation. 

Meeting adjourned to Aug. 17, 1901, at 7:30 p. m. 

Note— -T he student should write up these minutes in the Minute Book, exercising all the care that he would 
use were he holding the responsible position of Secretary in a real corporation. It is only by actual and 
faithful practice that one can learn, to do work of this kind. He should also try his hand at preparing a set 
of By-laws, such as he would consider desirable in the case of a corporation of the nature of the Central 
Canning and Drying Co. These By-laws might cover such matters as, i. The time of holding the annual 
meeting of Stockholders. 2. The time of Directors' regular meetings. 3. The general duties of the officers, 
4. Regulations governing the expenditure of the Company’s funds, the auditing of the accounts, etc. 


vfr < 


Memoranda for Aug. 10. 

. S. Milton & Sons renew their note of May 12, fav. D. F. & Co., for $487.50 with ac- 
crued interest at 8 per cent to date, giving us a new note at 60 days for whole amount due. 

Note— F ind the time by counting the days from one date to the other. 

''The foreman of the Cannery hands in a charge ticket, showing that 75 bu. of Peaches 
costing 85c per bu. and which were purchased for the Cannery, have been transferred to the 
Drier. 

Note — In a manufacturing business transfers are often made from one department to another, and of 
course, must be entered on the books when accounts are kept with the separate departments. The usual 
method is for the foreman of the department making the transfer, or his clerk, to make out a “Charge Ticket” 
or transfer bill in which the goods are described and their value stated. To prevent mistake, the charge 
ticket should be “OK-ed” or otherwise countersigned by the receiving foreman or clerk before being handed 
to the bookkeeper. The department to which the goods are transferred is debited, and the department mak- 
ing the transfer is credited. See entry for June 9, page 33. 

v/Marvin & Wright, Cincinnati, O., have ordered for immediate shipment at list terms: 
xoo Cs. Stand. Tomat. ; 75 Cs. Pie Ap. ; and 200 Cs. Stand. Cher. vVve find that we lack 75 
cases of having enough Standard Cherries in stock to fill this order. We have, therefore, 
purchased of the Eagle Canning Co., of Marion, O., on account, 75 cases of cherries of same 
grade^it $1.05 per case. 

NA'his is a transaction for which no provision has been made in the Voucher Payable 
Register and we therefore make a Journal entry. See entry for Jan. 10, page 33. 

H. Webster & Son of Hocking, O., have delivered three cars of coal, 21J2, 22, and 
23% tons, at $1.25 per ton. Billed Aug. 5, at 30 days. 

\We have sold to Farnham, Blair & Co. our entire stock of Canned Tomatoes, 1250 
cases “Perfection” at 60c and 985 cases of Standard” at 40c net. They hand their check for 
$500 in- part payment and their 60 day acceptance for balance. See entry for Jan. 11, page 33. 

\^ay Carter & Hall’s bill for stationery and minor supplies out of Petty Expense Fund, 
$12.25. 

vPhe Daily Journal Co., Hillsdale, O., present their bill of Aug. 1, for printing letter 
heads, etc., and for ruling and bindiiig a set of office books, $124.15. Issue Voucher with 
pay me rip- Charge this and any future expenditures for similar purposes to General Expense. 

^Pne firm of R. C. Noble & Co., Sharon, Ind., has made an assignment and the receiver 
has arranged to settle with creditors at 75 per cent. We accept the arrangement and re- 
ceive a check for the amount due us on this basis, and close the account. See entry for Jan. 
14, pa^e-33. 

vA. F. Scott, Hillsdale, O., presents buyer’s checks for 17 tons of Tomatoes from his 
farm that have been delivered at cannery; price, $6.00 per ton. Proceed as heretofore. 

vThe First National Bank presents for collection, Douglas, Fenton & Co.’s acceptance of 
June 11, 1901, (assumed by the new company) in favor of the Ohio Manufacturing Co. of 
Cleveland, for $621.50. We hand the bank our check and take up the acceptance. 

,^Ve have purchased of Venable, Davis & Brown, wholesale grocers of Pittsburg, Pa., 
supplies for Canning Dept. (Miscellaneous) amounting to $258.25. The goods are billed 
Aug- Vat 5-30 n-60. v 

votuart & Hall, Aurora, 111 ., have placed an order at list terms for 40 Cs. Pie Peach., 75 
Cs. Perf. Cher., 50 Cs. Perf. Corn, and 100 Bx. Orch. Peach. 

,\We have remitted a check to Braile & McKnight for their bill of July 11 for $329.70 
(rendered to Douglas, Fenton & Co. and assumed by the new Company) less allowed discount 
of 5 per cent. 

Note — As this is an old account, a voucher would not be used. Enter on the credit side of the Cash Book, 
also in Mdsg. Dis. Cr. column. Debit the firm with the sum of the remittance and discount and close and 
rule up th€ account. 

H. Rankin, Beulah, O., has delivered for the Drier 175 Bu. Silver White Peaches at 
the contract price, 75c per bu. ; also 85 bu. choice*, Crawfords for the Cannery at $1.15. 
Vouchef with payment. 

vWe have sold to M. C. Anderson for Cash, certain refuse products, as per bills present- 
ed by the foremen. Those from Cannery amount to $74.20, and those from the Drier to 
$50.55. As this is not an ordinary sale of our manufactured products, an account is not 
opened with Mr. Anderson. Merely credit “Canned Goods” and “Dried Fruits” with the 
propemamounts in the Cash Book. 

jGco. P. Morton pays Installment No. 3 with cash in full, and presents his Installment 
Certificates with a request for the issue of his stock. Proceed as instructed on page 6. 

v/J. M. Rice & Co., Louisville, Ky., buy a trial order of 125 Cs. Stan. Peach., 75 boxes 
Dia. Apples, and 40 Cs. ea. of Straw., Blk., and Rasp. Jam. The goods are billed at 30 
days net, and charged at 3 per cent less than list prices. 


50 


CORPORATION AND VOUCHER ACCOUNTING. 


I Cs. Pears in our ship- 
We send them Memo. 


\d^he Directors have allowed E. P. Moody to pay Installment No. 3 with his demand 
note with approved security, and bearing interest at 6 per cent. Mr. Moody presents the 
note, arid his stock is to be issued at once. 

v/C. A. Gregory & Co. report a shortage of 2 Cs. Bk. Beans and 
ment of the 3rd, verifying their statement with railway freight bills, 
of Credit for the amount. 

y?ne Brandon Co., Trenton, N. J., offer us a special discount of 3 per cent from the face 
of their bill, provided we will make immediate settlement in Cash. We send Voucher with 
check legs discount. 

Vjtfhn Maxwell, Clinton, la., remits cash less 4 per cent discount to balance account. 
-^Additional insurance policies covering property belonging to the company, have been tak- 
en out in various companies, the combined premiums on which amount to $78.20. Paid in 
cash. 

portion of the Cannery floor gave way, and the accident resulted in breakage and 
other damage to stock amounting to $75.40. Cash was paid for extra labor in clearing away 
the wreckage, packing, etc., $15.60. Charge to Loss and Gain. Journal entry. 

vPIie Chicago Tinning Co. send bill of Aug. 6 for supplies for the Cannery tin shop, 
amountmg to $42.70. Terms, 30 days less 5 per cent. 

\Jpwi Great Northern Hotel Co. of Chicago, have purchased at list terms 20 cases each of 
our enjire line of Jellies. 

y/A. T. Melville & Co. remit cash to balance account less allowed discounts and Memo, of 
Credit sent them Aug. 3. Deduct shortages allowed on bill of July 27, before computing the 
discount \ \ 

vTlie foreman of the Drier hands in charge tickets for raw products transferred to Can- 
nery asiollows : 45 bu. Peaches @ 65c, 25 bu. Apples @ 45c. 

'The Hillsdale Hardware Co. present bill of Aug. 9 for 25 Kegs Nails @ $2.55 for 
Cannery^'Casing department. Voucher with payment. 

v?ay the third installment on your own stock in cash. Issue installment certificate and 
close up your Installment Ledger Account, after which issue your stock in three certificates 
of 60, 40, and 25 shares, respectively, properly crediting your account in the Stockholders’ 
Ledger for each certificate issued. 

Note — As Secretary you have a right to issue your own Stock Certificates as you would those of any 
other stockholder, provided that the stock has been paid in full and the certificates are duly countersigned 
by the president. 

VSi H. Bannon & Co. of Syracuse, O., order at list terms and prices 150 Cs. Perf. Tomat., 
this year’s crop. We are short 50 cases on this order and have bought the required quantity 
from tffe Eagle Canning Co., on account at 70c net. 

\/C. H. Bell & Co. report six boxes of the peaches sold them on Aug. 3, as being damaged 
and unfit Jor sale, and ask for a memoranda o f credit for invoice cost. We comply with their 
requesh^ 

vThe B. & O. Ry. presents Freight bill for week ending Aug. 10, as follows: 3 Cars 
Coal C. H. W. & Co., Hocking, O., $24.75; Venable, Davis & Brown, Pittsburg, Pa., $34.90; 
Chicago Tinning Co., $6.25. Voucher with payment. 

Prey-rate this bill among the accounts involved as shown by the Voucher Record, 
^gfipt. Barnes presents pay roll for the week as follows: Canning Dept., $2,025.60. 
Drier, $714,75. Proceed as heretofore. 

vPdy and enter up the weekly salaries for the same amounts as last week. 

J 2 mr traveling salesmen report expense bills for week ending Aug. 3, as follows : A. W. 
Long, $47.20; Chas. Baker, $52.80; J. A. Martin, $38.75. 

have paid Mrs. A. W. Long $50 on 'account of her husband’s salary, and we have, 
on request, remitted J. A. Martin $75 on his salary account. 

\/Cll amounts due on Installment No. 3 have been paid in cash. Issue the required stock 
certificates. Clo'se the several accounts in the Installment Ledger, and open the required ac- 
counts in the Stockholder’s Ledger. 

Post the books to date and take a Trial Balance of the Ledger. 

Note — Open the account with the Eagle Canning Co. in the General Ledger. 

Prepare a schedule of the balances of the several accounts in the Sales Ledger, in order to 
see if their total agrees with the balance of your Sales Ledger Account. Submit these to your 
teacher for approval before continuing your work. 


MEMORANDA FOR AUG. 17. 


SI 


Memoranda for Aug. 17. 

\A^S. Holloway, Columbus, O., orders at list terms, 150 cases Standard Peaches. 

vFhe Buckeye Manufacturing Co., of Cincinnati, have delivered and set up new machin- 
ery in the Cannery, as per bills rendered, Aug. 15, amounting to $15,586.45. These bills 
have been duly approved by the proper corporation officials' and filed. We issue voucher 
with N. Y. Draft in payment. We pay $2.50 exchange on this draft which is charged to 
Gen. Expense in the Cash Book. 

(We have been awarded the contract for supplying the canned goods and dried fruits re- 
quired by the Asylum for the Insane at Kalamazoo, Mich. We are to. deliver these goods at 
the Asylum storeroom at Kalamazoo at our list prices. Ill accordance with these terms, we 
have shipped per their order of Aug. 16, 50 cases each, of our Perfection Peaches, Pears, 
Blackberries, Cherries, and Apples ; 100 cases each of Boston Bk. Beans, “Perfection” Corn, 
and Perfection Peas, prepaying the freight charges in cash, amounting to $65.45. Charge 
this anff, other similar freight bills to the Canned Goods Account. 

vWe have received from A. T. Casterlin of Benton Harbor, Mich., 150 bu. Peaches @ 
$1.25 for canning and 90 bu. Peaches @ 85 cents for Drier, as per his bill of Aug. 12, we 
remit yducher with Chicago dft. for payment. 

\,We have sold to the Eagle Canning Co., on account 75 cases Perfection Green Beans at 
85 cents net. 

Note— As our account with the Eagle Canning Co. is in the General Ledger, the entry of this sale should 
be made in the Journal, and not in the Sales Journal, since the latter book is exclusively for entries that are 
to be pasted to the Sales Ledger. 

no. H. Arthur & Co. settle their account to date with their note at 60 days. 

pPd f Cash from Petty Expense fund for electric light fixtures, $2.50; a dusting brush, 
50 cepts; a broom, 35 cents; and a floor sprinkler, 40 cents. 

VwVe have handed the First National Bank our check to pay Douglas, Fenton & Co.’s note 
of May 19 (assumed by the company) in favor of Seymour & Co., Chicago, for $649.20 
with qoffays’ interest at 7 per cent. 

V-Kejnitted Chas. Baker on account of salary, $125. 

vBell 25 shares of your C. C. & D. Co. stock to M. F. Coe of Newbury, Ind. 

Note— As this is a transaction concerning yourself personally, no entry in the Operating Books is re- 
quired. Transfer the stock to Mr. Coe, as instructed on page 7. 

vA called meeting of the stockholders was held on this date to consider the matter of 
purchasing from the owner, J. S. Henderson, the site and buildings at present occupied by 
the company. All stockholders were present except Mr. Martin and Mr. Nelson. The Sec- 
retary, at the request of the President, read a communication from, Mr. Henderson in which 
he offered to give a warranty deed to the property, free of all taxes and other incumbrances, 
for the sum of $50,000 in Cash. Mr. Fenton offered a resolution in favor of the proposed 
purchase and addressed the meeting in favor of accepting Mr. Henderson’s proposition. 

^Several stockholders spoke on the question, some favoring and some opposing the pro- 
posed investment. Mr. Douglas moved that the vote be^ by ballot, and that the result be 
spread uppn the minutes. The stockholders cast votes as per shares held by them, as fol- 
lows r— ^ 

\Foy the purchase, Messrs. Fenton, Hanion, Barnes, Student, and Morton. 

^gainst the purchase, the remainder of the stockholders present. Mr. Fenton held a 
proxy from Mr. Martin and voted his shares in favor of the resolution. Mr. Douglas held 
Mr. Nelson’s proxy and voted his shares against the purphase. After the matter of the Hem 
derson purchase had been disposed of, it was moved by Mr. Douglas that the reserved Treas- 
ury Stock, provided for by the Articles of Incorporation, be placed on the market, the same 
to be held open for sale under such regulations as may be made by the Board of Directors ; 
provided, that none of this stock be sold at less than 10 per cent below its par value. After 
some discussion this motion was carried unanimously. No further business was transacted 
at the stockholder’s meeting, but upon its adjournment, a meeting of the Board of Directors 
was at once held, a full board being present. Director Moore offered a resolution to the ef- 
fect that the Treasury Stock should be offered for sale to the public under the following 
conditions : — 

yJJIrst, that a cash payment of not less than 25 per cent be required on all stock sold, with 


52 


CORPORATION AND VOUCHER ACCOUNTING. 


secured notes or other securities approved by the President and Treasurer of the Company 
for the, balance, said notes to bear 6 per cent interest. 

'vSecond, that for the present, stock which is to be paid for in full in cash be offered at 
5 per cent below par. 

The resolution was carried without dissent. 

v^Cfn motion, the Secretary was instructed to close the books and prepare a financial state- 
ment, exhibiting the state of the business at the close of the week ending Aug. 17, with a 
view to ascertaining if the results of the first month’s business would justify the declaring of 
a dividend. Meeting then adjourned. 

Write up the minutes for both meetings, giving a schedule of the votes cast by the stock- 
holders aUthe stockholders’ meeting, and the majority in favor of the purchase of the Hen- 
derson property. 

^Prepare for booking sales of Treasury Stock by making the Journal entry as instructed 
on page 22. 


VOUCHER CHECK. 


No. E- 176 
Amount $451.30 


If this voucher does not agree with your books, return WITHOUT ALTERATION and state difference. 


T. M. SINCLAIR <S CO.. Ltd. 
Cedar Rapids, Iowa. 

190 1 


Pay to the order of //. S. Potter & Co., 

128 Dearborn St., Chicago 

Four Hundred Fifty-one DOLLARS. 


May 

7 

Mdse, per Invoice of April 28, 30d 

475/5 





Less 5 percent 

2376 

451 

39 





















— 

— 













Examined: i?. Sinclair, Approved: C. P. Carter. 

Secretary. Treasurer. 


$- 


451.39 


Date_ 


Chicago. May 28, 


J90_L 


Received from T. M. SINCLAIR & CO. LTD., Cedar Rapids, Iowa, 

Four Hundred Fifty-one ,Ya DOLLARS 


being in payment of above account. 


H . S. Potter & Co., 

Per J. N. P. 


Payee. 


Special Notice— Receipt only by those having authority, and in ink. Paying bank will not ac- 
cept unless conditions are complied with. 


PAYEE SHOULD ALSO ENDORSE. 


MEMORANDA FOR AUG. 17. 


S3 


Form for Endorsement on back of Voucher Check, 


No. E 176 


Endorsement should appear below. 


T. M. SINCLAIR & CO. Ltd., 

Cedar Rapids, Iowa. 


H . S. Potter & Co.. 

Per J. N. P. 


Payable to //. S. Potter & Co., 


128 Dearborn St., Chicago. 


or order. 


The Commercial Exchange Bank of New York 
will pay the amount of this Voucher when properly 
signed and endorsed. 

v Voucher Check. Many large concerns make their payments by means of a com- 
bination check and voucher, which is known as a “Voucher Check.” It consists of an or- 
dinary voucher on the back of which is an order to a designated bank; authorizing the pay- 
ment of the voucher to the payee or his order, when properly countersigned by the firm issu- 
ing it and receipted by the firm to whom it is payable. 

The payee is required to endorse the check when he receives payment, after which the 
instrument is returned by the bank to the drawer, as in the case of an ordinary check. 

The use of the voucher check saves the making out of ordinary checks, relieves the 
payee of the necessity of returning the voucher, and saves the trouble of subsequently at- 
taching together the voucher and check, which is often done when these are issued as sepa- 
rate papers. 

vThe accompanying form illustrates the voucher check as it is used by one of the great- 
est manufacturing concerns in the West. 

uTdereafter, you are to use voucher checks for all payments requiring the issue of vouch- 
ers. A book of voucher checks will be found in your equipment. In issuing them, fill out 
all forms completely, with the exception of the receipt which is filled out by the person re- 
ceivin^the voucher check, and before he presents it at the bank for payment. 

vAdams & Robinson, the Company’s attorneys, present their bill dated Aug. i, for their 
service^in connection with the organization of the Company, $25. Issue voucher check. 

V€b C. Oliver & Co. order at list terms, 75 cases Perfection Tomatoes, 100 cases Stand- 
ard Pea£, and 45 boxes Diamond Peaches. 

vPne purchase of the J. S. Henderson property has been duly consummated, and the 
company’s certified check for the purchase price, $50,000, has been handed to the former 
owner^Charge the amount to Plant in Cash Book. 

\We have taken out additional insurance policies on the Plant, the premiums on which, 
amounting to $75.80, have been paid in cash. 

\)Ve have sold to A. T. Melville & Co. at 30 days net, our remaining stock of Dried 
Peaches of last year’s crop, 275 Boxes, “Diamond” at 7 cents and 125 Boxes “Orchard” at 
5 J 4 cents. n 75 shares of his company stock. Proceed 

\,James Douglas has sold to A. W. Nelso 
as instructed on page 7. 

u-The Cedar Creek Milling Co. of Alma, O., have delivered at the Drier box shop, 20 M. 
ft. Poplar boards, @ $14.50. Bill of Aug. 15 ; terms, 30 days net. Make out, but do not de- 
liver voucher. 

^^Chas. A. Shaw, 568 State St., Chicago, has bought 50 shares of Treasury Stock in ac- 
cordance with the terms prescribed by the Board of Directors, and remits a certified check 
for 25 per cent of the amount, and his approved note at 60 days for the balance. (Journal 
Entry). Issue the stock and make necessary entry in Stockholder’s Ledger. 


54 


CORPORATION AND VOUCHER ACCOUNTING. 


'''Our buyer, Mr. Moody, presents certificates for purchase of raw products as follows : 
Cannery, $1775.25. Drier, $856.20. Issue voucher check. 

vAn invoice of miscellaneous supplies for the Cannery has been received from the Union 
Spice Co. of Philadelphia, as per their bill of Aug. 8th, $72.15. Terms 5-30. 

N0T&7-D0 not compute discount or fill out check part of voucher till maturity. 


v( 5 ne 


5 per cent, to balance their account with Doug- 


)ne hundred bushels of apples purchased for the Drier at 50 cents per bu. have been 
transferred to the Cannery. 

^^tewart & Hall have remitted cash, less 
las, Fenton & Co., the amount of which was $247.50 before discount. 

pJ0wing to a general advance in the prices of food products, it has been decided to revise 

the Quotation List and increase prices. Hereafter use Quotation List No. 2, for all sales. 

Put “Qpdfation List No. 1” away where it cannot be used by mistake instead of the other. 

WVe have sold to John Maxwell, Clinton, Iowa, at 60 days, 50 Cs. Stand. Cher., 100 Cs. 
each of Per. Corn and Tomat., and 25 Box Orch. Pears. He is to pay our revised prices 
with axliscount of 5 per cent off if payment he made within 30 days.. 

vThe Great Northern Hotel Co. remit cash to balance account less allowed discount. 
^pCR. Jones, 495 Main St., Cincinnati, O., has purchased 75 Shares of Treasury Stock 
at 5 per cent discount paying cash for the same. For required entry see page 19. 
vP. Harrington presents bill for drayage to date, $62.25. Voucher Check. 

QiVe have sold to the Graham Grocery Co. at list prices, less 5 per cent for cash in 30 

days, 60 days net, 200 Cs. Perf. Tomatoes, 50 Cs. each of Rasp., Straw., and Blk. Jam, 

and 75 Bx. Dia. Peaches. 

vUie Ohio Lumber Co. buy of us on account 7500 ft. of rough pine at $9.50 per M., 
bought originally for the Casing Dept, of the Cannery but which was found unsuitable for 
the purpose intended. (Journal.) 

P. Moody has bought 25 shares of Treasury Stock at par, paying 25 per cent in cash 
and hH-note for the balance with approved security. 

vSold to C. A. Gregory & Co. at list terms : 75 Cs. B. Bk. Beans; 125 Cs. Perf. Corn'; 
125 CLLPerf. Tomat.; 100 Cs. Perf. Peas, and 40 Bx. Orch.' Peach. 

i/We have sold to the Great Northern Hotel, at list prices net F. O. B. Chicago : 
each Blk., Straw., Rasp and Cr. Ap. Jam. 
in cashC 

•N/Chas. T. Fenton buys 50 shares of Treasury Stock at 
for the /Sbme in cash. 

\X. B. Holloway remits cash in payment of our bill of Aug. 3, and prepaid expressage, 
less allowed discount, on merchandise charge. 

Qflie Morgan Evaporator Co., Cleveland, O., have delivered and set up machinery for 
the Drier, as per their bill of Aug. 16th amounting to $7946.75. Terms, 5-30 n-60. 

The Kalamazoo Asylum sends us a bill for $8.25 for drayage paid by them on our re- 
cent shipment. We remit cash for the amount. 

Note — In ordinary mercantile business, a payment of this kind would probably be adjusted by simply de- 
ducting the charge from the amount of the bill when the remittance is made. But when the Voucher System 
is used (as is the case in most State and Government institutions) the necessity for agreement of amounts in 
the bill, with the voucher, and the check by which it is paid, requires that drayage, or other items of a similar 
charactenVbe treated as separate charges, which are adjusted before the seller’s bill is audited and paid. 

Vube Supt. files pay roll for the week: C. Goods Dept., $2244.70; Drier, $821.40. 

\/ 0 n account of ill health, our traveling agent, A. W. Long, has resigned. He presents 
his expense bill for the week for $41.15, We issue voucher with payment for this bill, after 
which we hand him a check for one month’s salary, less what has already been paid him. 
Make a Journal entry “General Expense to A. W. Long” crediting him one month's salary, 
then post and close his account. 

Note — Separate Cash Book entries should be made for the voucher and the salary payment. 

\/t has. Baker reports weekly expense bill for $49.10 and requests a payment of $50 on 
salary account. Voucher and check are sent him for the required amounts. 
yA A. Martin forwards expense bill for $39.60. Voucher. 


15 Cs. 

The freight charges are $7.25 which we prepay 
5 per cent less than par, paying 


INSTRUCTIONS FOR FIRST CLOSING. 


55 


yfhe 


The B. &. O. Ry. freight bill for the week is as follows : — 

Buckeye Manf. Co., Cincinnati, Machinery, etc $ 9 2 - x 5 

A. T. Casterlin, Benton Harbor, Mich., 240 bu. Peaches 84. 

Union Spice Co., Phila., Mdse..'. 6.25 

Morgan Evap. Co., Cleveland, Machinery, etc 59 - 20 

Proceed as with previous freight bills, properly pro rating the amount among the sev- 
eral accounts affected and issue Voucher Check. 


Note— T he freight on the peaches should be apportioned according to the number of bushels, not to the-- 
cost. ‘ 

Credit Chas. Baker and J. A. Martin each with one month’s salary. > 5 ° ^ 
vpay the usual office salaries for the week, -v L 1 . 

Post the books and prepare trial balance. 

You are now to effect a general closing of the books for the purpose of ascertaining the 
present financial condition of the concern, and, should results justify it, to distribute accrued 
profits by means of a dividend. In ordinary business this would usually be deferred until the 
close of the season, but should it appear that the business of the concern had been profitable, 
sound financial reasons might exist for declaring a dividend at once. Thus the prosperity 
evidenced by the declaring of a substantial dividend, might give a desirable stimulus to the 
market value of the Treasury Stock, or help to establish the credit and business standing of 
the company. 

After your Trial Balance has been approved by your teacher, you may proceed to prepare 
a financial statement, or balance sheet, and close the books in accordance with the follow- 
ing:— . 


Instructions for First Closing. 


The model Trial Balance and Statement, on page 56 and 57, with the exception of 
amounts are identical with those required for this closing. It will be well for you to study 
them somewhat, before proceeding to prepare your own statement. 

Observe that the balances of the Franchise and Treasury Stock accounts are listed 
among the resources, that the total Capital Stock is listed as a liability, and, that the general 
balance of the resources and liabilities, as thus listed, constitutes the net gains of the busi- 
ness. Notice how the several department accounts of Canned Goods and Dried Fruits are 
combined, so as to show the total inventories, cost, receipts, and gains for each of these two 
main departments of the business. These totals, as given under the Schedule of Gains and 
Losses, are obtained by combining the amounts of the department accounts as listed in the 
Trial Balance. 

Notice that the gain on the Interest Account is obtained by adding the accrued interest 
payable to date, to the total debits, and subtracting the result from the sum of the credits and 
the accrued interest receivable. Observe that the question as to the gain or loss on the in- 
terest account for any business period, depends not on whether we owe more interest than is 
owed to us, but on whether more interest payable or more interest receivable, has accrued 
since the last closing of the books. 

When satisfied that you understand the methods involved in the model statement, you 
may proceed to the preparation of your own statement, assuming the following inventor- 


ies : — 


Canned Goods 


“ Raw Product. 

“ Casing 

“ Miscellaneous 


/Dried Fruit 


“ Raw Product 
“ Casing 


Fuel 

Interest Receivable 
Interest Payable . . 
Plant (at cost) . . . 


$21568.50 

347 - 2 ° 

258.60 . 

821.15 
1243.25 
356.20 

154-90 

95-75 

79 - 5 o 

187.50 

I53585- 


56 


CORPORATION AND VOUCHER ACCOUNTING. 


When your statement is prepared, submit it to your teacher for approval. 

Your statement having been submitted to a called meeting of the Board of Directors, 
after due consideration, they decide to declare a dividend of three per cent on the issued 
Stock, the. same to be payable in cash, on or before Aug. 24, 1901, and instruct the Secre- 
tary to prepare a Dividend List and remit by check the amounts due the several stockholders 
as shown by the Corporation Books. 

Write the minutes of this meeting, after which close the book, proceeding as follows : — 

1. Enter in red ink all inventories in the respective accounts. 

2. Prepare on a loose sheet of Journal paper, entries for closing the several accounts 
of the General Ledger, as indicated by the accompanying model entries, which are those re- 
quired for the Model Statement, page 57. 


Canned Goods 17161. <50 

C. G. Raw Product 

“ “ Casing 

“ “ Miscel 

“ “ Labor 

Entry for closing Canned Goods Dept, accounts. 


6846.4 s 
686.05 

1506.55 

8122.45 


The credit items of this entry are the several balances of the Canned Goods Dept. Accounts AF~ 
the inventories HAVE BEEN ENTERED. The entry for closing the Dried Fruit Dept. Accounts is 
♦btained in the same way. 


Dried Fruit 5646.41 

Dr. Fr. Raw Product 

“ “ Casing 

“ “ Labor 

Entry for closing Dr. Fr. Dept. Accounts. 


2480.41 

41975 

2746.25 


Model Trial Balance, Aug. 17. 


Cash 

Capital Stock 
Treas. Stock 
Franchise 
Plant 

Canned Goods 

“ Raw Prod. 

“ Casing 
“ Miscel. 

“ Labor 

Dried Fruit 

Raw Prod. 

Casing 

Labor 

Vouchers Payable 
Fuel 

General Expense 
Petty “ 

Mdse. Disc. 

Bills Receivable 
Bills Payable 
Interest 
Sales Ledger 
Chicago Tin Co. 

J. A. Martin 
Eagle Can Co. 

Loss and Gain 
Ohio Lumber Co. 

Stock Discounts and Premiums 
Chas. Baker 


15172 

33 





250000 


50000 


20000* 


20941 

26 



153641 

20 



2812 

55 

7062 

15 

7258 

90 

71 

20 

1015 

60 

68 

40 

2341 

75 



8122 

45 



571 

16 

6721 

35 

2915 

90 

86 

24 

582 

50 



2746 

25 

* 


42816 

25 

53638 

79 

342 

06 



2618 

20 



50 




91 

42 

153 

79 

16295 

80 

702 

30 

1321 

45 

2216 

50 

75 

21 

192 

45 

15894 

20 

7325 

60 



192 

15 

125 


150 


62 

95 

115 

80 

T78 

30 



75 

60 

96 

75 

650 




200 


125 


348918 

29 

348918 

29 






57 


MODEL STATEMENT, AUG. 17. 


Model Statement, Aug. 17. 


RESOURCES. 


Cash 

Plant Inventoried at cost 
C. Goods 

C. Goods Raw Prod. 

“ “ Casing 
“ “ Miscel. 

Dr. Fruit 

Raw Prod. 

“ Casing 

Fuel 

Bills Receivable 
Sales Ldger, Acct. 

Interest Rec. (Accrued to date) 
Petty Expense (Unexpended) 
Chas. Baker (Salary overdrawn) 
Treasury Stock (Unsold) 
Franchise 


Invt. $21632.56 

" 341.25 

“ 261.15 

“ 835.20 

“ 1251.16 

349.25 
“ 162.75 


LIABILITIES 

Capital Stock 
Vouchers Payable 
Bills 

Interest “ (Accrued to date) 
Chicago Tin Co. 

Eagle Canning Co. 

Ohio Lumber Co. 

J. A. Martin (Salary Account) 


Bal. Net Gain 

Schedule of Gains and Losses. 

GAINS 


C. G. Dept. Credits 
“ “ Invt. 

“ “ Cost 


$ 7201.75 

23070.16 $30271.91 

21551,25 


Dr. 


“ Gains 
Fr. Dept. Credits 
“ Invt. 

11 Cost 


$ 6807.59 
1763.16 


‘ ‘ Gains 

Interest Credits and Inventory 
Interest Debits and Inventory 


Interest Gains 
Mdse. Discount 


$ 8570.75 
6815,8 1 

$ 273.65 
267.46 


LOSSES. 


Gen. Expense 
Petty Expense Reserved 
Unexpended 
“ “ Loss 

Fuel Cost 
“ Invt. 

“ Loss 
Loss and Gain 
Stock Prem. and Dis 


$ 50.00 
9.15 

$342.06 

97.30 


Bal. Net Gain 

l 


15172 

33 



153641 

20 



23070 

16 



1763 

16 



97 

30 



15593 

50 



8568 

60 



81 

20 



9 

15 



75 




30000 

20941 

26 

269012 

86 

250000 




10822 

45 



895 

05 



192 

25 



192 

15 



52 

85 



21 

15 



25 


262200 

90 



6811 

96 

8720 

66 



1754 

94 



6 

19 



62 

28 

10544 

07 

2618 

20 



40 

85 



244 

76 



178 30 



650 


3732 

11 



6811 96 

1 1 


58 


CORPORATION AND VOUCHER ACCOUNTING. 


Canned Goods 8720.66 

Dried Fruit 1754-94 

Interest 6.19 

Mdse. Disc 62.28 

Loss and Gain 

For closing accounts showing gains. 

Loss and Gain 3 5 53-8 1 

General Expense 

Petty Expense 

Fuel 

Stock, Disc, and Prem 

For closing accounts showing losses. 


10544.07 


2618.20 

40.85 

244.76 

650. 


Loss and Gain 6811.96 

Dividend No. 1 6600. 

Surplus 211.96 

For balance of L. & G. carried to Surplus Account and Dividend No. 1, 
for dividend of 3 per cent on issued Capital Stock $220,000. 


When your closing entries have been approved by your teacher, copy them into your 
Journal, post them to the Ledger, rule up the several accounts, and bring down all inven- 
tories. 


Note — It is unnecessary to close the other ledger accounts, but this may be done in any case when the 
totals for forwarding are inconveniently large, as in the case of the Sales Ledger, Bills Receivable, Vouch- 
ers Payable and a few other accounts. Should it be found desirable to balance and close any of these ac- 
counts, it may be done without making Journal entries. It is in accord with the latest accountancy practice, 
however, to employ Journal entries, when closing the several financial accounts at the conclusion of a business 
period. 


Before beginning the records of the new business period, prepare a Preliminary Trial 
Balance, in order to be assured that the books are in balance. Mistakes may have occurred in 
forwarding the balances, etc. Before preparing this Trial Balance, be sure that all inventories 
or balances are properly brought down. When the Trial Balance is prepared, submit it to 
your teacher for approval, after which continue business as follows : — 




Memoranda for Week Ending Aug. 24. 


.he Cash dividend of three per cent on the issued stock is to be distributed in accord- 
ance with the vote of the Board of Directors. Enter in the Dividend Book; as shown on 
page 17, crediting each stockholder with the sum to which he is entitled as shown by the 
number of shares standing to his credit in the Stockholders’ Ledger. Assuming that checks 
have been drawn and remitted to the several Stockholders, make a credit entry in the Cash 
Book, charging “Dividend No. 1,” with the amount of the dividend, post this entry, and 
properly rule up the account. 

vWe have received from the Kalamazoo Asylum their voucher with check for our invoice 
of Aug. 1 7th. 

v^mucher No. 15, favor Chicago Sugar Refining Co., has been paid with Chicago dft. 
less the discount to which we are entitled by the terms of sale. 

V^fthur Moore hands us cash for his note given July 27, in payment of the first install- 
ment of his stock, with 6 per cent interest to date. 

pTfie Cleveland Fruit Co. of Cleveland, O., present bill of Aug. 20 for 125 Bu. 
Peaches at 95c. 50 Bu. of this fruit is turned into the Drier and the remainder to the Can- 
nery. j^Voucher Check.) 

I'fhe Great Northern Hotel Co. remit Cash to balance account. 

vWe have purchased of Braille & McKnight, St. Louis, terms 5-30, tinning supplies for 
Cannejy as per bill rendered Aug. 22, for $149.64. 

v AVe have sold Angell & French, Cleveland, O., at list terms, 150 Cs. Stan. Cher.; 75 
1 Cs. B. Bk. Beans; and 40 Cs. each of our full line of jellies. 


MEMORANDA FOR AUG. 24. 


53 


We 


It have received from R. S. Cox of Monmouth, O., a shipment of 385 Bu. White 
Beans^and his bill for same at $1.75 per bushel, dated Aug. 17. Voucher Check. 

vC A. Gregory & Co. remit Cash in payment of our invoice of Aug. 3, less allowed dis- 
countand our memorandum of credit of Aug. 10. 

'vJray to Ohio Telephone Co. telephone rent to Aug. x, $4.75, out of Petty Expense Fund. 

rnham, Blair & Co. hand us Cash to balance their account to date. 

V#old to Marvin & Wright, at list terms, 75 Cs. Pie Peach. ; 50 Cs. Pie Blk. and 40 Cs. 
each of Stan. Pears and Cher. They remit with this order a check for such a sum as will 
entitlcRhem to a credit of $400. 

■^lie Treasurer of the company hands you a check for $25 for Petty Expense Fund. 
^J. McCoy pays his note of Apr. 26, 1901, favor of Douglas, Fenton & Co. for 
6.55, with interest from date at 6 per cent. 

NoTE-^fn computing the interest, find the time by taking the exact number of days from Apr. 26 to 


$1 


Aug. 


0 . C. Anderson buys on account at 30 days, refuse products of the Cannery amounting 
to $65.20, and of the Drier $38.75. As this is not a Sales Ledger account, make Journal 
entry./ 

VThe Delavan Machine Co., Hillsdale, O., present their bill of Aug. 20, for repairs on 
machinery $19.60. Hereafter, unless otherwise directed, issue Voucher Checks for all bills 
presented except those for time purchases. Use your judgment as to the accounts to be 
charged. 

y\t a meeting of the Board of Directors, held on Aug. 19, it was decided to sell no more 
Treasury Stock, except at a premium of 5 per cent, payment to be made in cash, or in 
first class securities. Supt. Barnes recommended that Henry Simpson be employed as night 
watchman in place of J. Ryan, who failed to report for duty, at a salary of $15 per week, his 
employment to date from Aug. 17. The desired action was taken. 

’ite the minutes of this meeting. 

* v 0 n Aug. 18 a small fire occurred in the Cannery warehouse. The losses as adjusted by 
-the Mutual Ins. Co. are as follows : — 

vBuilding $75, 15 cases Cr. Ap. Jel. at list prices, several barrels of sugar (partial 
damage) $15. The entire amount has been remitted by check. Enter in Cash Book credit- 
ing ‘Tlant,” “C. Goods” and “C. G. Miscel.” 

\Zhe Kalamazoo Asylum has ordered at list prices, net, 15 Cs. each of Rasp, and Straw. 
Jam, and 15 Cs. Blk. Jel., 5 Cs. Stan. Ap. B., and 20 Cs. each of Rasp, and Cr. Ap. Jel. We 
have prepaid freight and drayage in cash, $37.90. 

yThe Graham Grocery Co., Hannibal, Mo., remit Chicago draft for their acceptance of 
July 25, $456.80. 

vWe have received from A. C. Marmadake & Co., Columbus, O., a shipment of nails 
and other hardware for our Drier Casing Department, per their bill of Aug. 16 amounting to 
$71.56. The goods are billed at 30 days, less 5 per cent if paid at maturity. 

v&ixty bushels of Pears, costing 45c per bu., have been transferred from the Drier to the 
Cannery. v 

VDouglas, Fenton & Co.’s note of July 1, 1901, for $428.60 in favor of Eugene Barlow 
& Sons/vith interest at 6 per cent from date, has been paid in Cash. 

vWe have paid Voucher No. 16, favor Ohio Lumber Co., with N. Y. dft. 

A. Rogers & Co.’s bill of Aug. 21 for stationery, etc., $4.25, has been paid out of 
Petty Expense fund. 

VWe have sold to Stuart & Hall at list terms, 45 Bx. Orch. Peach. ; 125 Cs. Perf. 
TomaR; 100 Cs. Perf. Gr. Beans; and 50 Cs. Stan. Peas. 

vA. B. Hillis, Hillsdale, O., has purchased 25 shares of Treasury Stock at 5 per cent 
premiupr giving his 60 day note for the same with approved security. 

vWe pay with voucher check the bill of Aug. 23, rendered by L. B. Morley & Sons, 
Hillsdale, O., for repairing damage to building, caused by fire, $62.45. Debit “Plant,” as 
this account was credited with the insurance. 

yWe have sold to T. C. McLean & Co. of Hillsdale, O., the following goods, at a dis- 
count of 6 per cent from our list prices; they pay $250 in cash and hand us their acceptance 
at 30 days for balance: — 25 Bx. Dia. Ap. ; 150 Cs. Stan. Tomat. ; 25 Cs. each of Perf. 
Blk., Cher., and Pears; 75 Cs. Perf. Peach., and 40 Cs. B. Bk. Beans. 


60 


CORPORATION AND VOUCHER ACCOUNTING. 


The Graham Gro. Co. report a shortage on their order of Aug. 17' of 5 Cs. Per. Tomat. 
and i£s. Blk. Jam. Have sent them memorandum of credit for the amount. 

we have sold to the Eagle Canning Co. on acct. 50 Bx. Dia. Ap. at 6j4 c per lb. deliv- 
ered at our warehouse. Journal entry. 

VThe Student buys of A. W. Nelson, 20 shares of Stock. Mr. Nelson first surrenders 
Certificate No. 17 for seventy-five shares, and has issued to him two other certificates for 
55 and^o shares, respectively. He then transfers the latter to the Student. 

We have paid city taxes on company property amounting to $287.95. 

HP. T. Bell buys 25 shares of Treasury Stock at 5 per cent above par, handing us a cer- 
tified check for the amount. 

Note— This transaction should be entered in the Cash Book, “Treasury Stock” and “Stock Dis. and Prem- 
iums” beipg credited in separate entries. 

vthe Buckeye Manufacturing Co., Cincinnati, have delivered and set up new machinery 
for the Drier and rendered a bill for the same, dated Aug. 22, to the amount of $4426.70. 
We pay. this bill, remitting voucher with N. Y. dft. 

pSold to S. H. Arthur & Co. at list prices, less 5 per cent, terms cash on receipt of goods : 
75 Bx/Dia. Peach.; 125 Cs. Perf. Tomat.; 75 Cs. Stan. Peas; and 50 Cs. Pie Peach. 

VBuyer, E. P. Moody, presents foreman’s receipts for raw products purchased and deliv- 
ered to the Cannery, amounting to $1568.75 and to the Drier, $862.15. Voucher Check as 
heretofore. 

\We pay P. Harrington’s drayage bill to date, $47.60. Voucher Check. 
vWe have sold to the agent of Benson, McGuire & Co., Chicago, dealers in second hand 
machinery, lot of discarded machinery, castings, belting, etc., as per our invoice, amounting to 
$2368x19. Terms Cash on receipt of shipment at Chicago. Journal entry. 

vTmding the sugar purchased of the Chicago Sugar Refining Co., on the 3rd inst., not 
so well adapted to our purpose as other brands, the superintendent has sold out the remaining 
stock on hand, 42 barrels, 300 lbs. each, to various local merchants for cash at sH c P er lb. 
and turns in the money received. 

\,&n Aug. 17, we drew a draft on C. H. Bell & Co., Muncie, Ind., through our local bank 
for the amount of their balance favor Douglas, Fenton & Co. The bank now reports col- 
lection, and has placed the amount to our credit, less 50 cents for collection. Debit Cash 
for the whole amount, and credit Cash for the collection, charging the item to General Ex- 
pense. 

\We have arranged with the steward of Hartwell College, Mayfair, O., to supply that 
institution with our goods at such prices as may be agreed upon, we to prepay the freight 
charges. The first order is for canned goods at ten cents per case in advance of our list prices, 
as follows: 60 Cs. Perf. Tomat.; 25 Cs. each of Perf. Peach., Cher., Pears, and Blackber- 
ries. Also, 20 boxes Dia. Ap. at 7% c, and 25 Bx. Dia. Peach, at 8j4c. Terms cash on re- 
ceipt of goods. The freight, which we pay in Cash amounts to $9.05 for the Dried Fruit 
and $10:65 for the Canned Goods. 

v^5ur traveling salesmen report Expense Bills for the week as follows : Chas. Baker, 
$51.90; J. A. Martin, $46.75. Proceed as heretofore. 

We pay B. & O. Ry. freight bills for the week as follows : — 
t/€leveland Fruit Co., 7800 lb. Peaches^ 10c per 100, (Cannery $4.68. Drier $3.12). 
Braille & McKnight, tinning supplies^fiT.pO. R. S. Cox, Monmouth, O., carload beans 
$3 2 -75- (Cannery). Marmaduke & Co., nails, etc., for Drier casing department $14.20. 
Pro-rate the amounts among the several accounts affected as heretofore. 

l/fne Treasurer has drawn the Company’s check for $25, as a contribution to the Fire- 
man’s Relief Fund, as authorized by the Directors. Charge to General Expense. 
vSffpt. Barnes reports weekly pay roll as follows: — 

Cannery $2369.75 ; Drier $986.20. 

\zfhe officers’ weekly salaries are paid as heretofore, with the addition of Henry Simp- 
son’s salary as night watchman, $15. 

Post the books and take off a Trial Balance. When the same is approved, continue busi- 
ness as follows:— 


MEMORANDA FOR AUG. 31. 


61 


vWe 


Memoranda for Week Ending Aug. 31. 

Je have received from the American Sugar Refining Co., Cincinnati, an invoice of 50 
bbls. Standard Granulated Sugar (300 lb. ea.) at 5%c per lb. billed Aug. 22. Terms, 10 
days net. We send voucher check. 

\ZT P. Moody has transferred 25 Shares of the Company Stock (Cer. No. 20) to C. R. 
Jones/ 

jA Monroe & Co. remit cash for their purchase of July 27. 

cThe Great Northern Hotel Co. order at list prices, net, F. O. B., Chicago, 50 Cs. each 
of Perf. Peach., Pears, Blk., and Cher., and 75 Cs. each of Perf. Corn and Peas, 
prepay freight in cash, $32.50. 

<Xhe Buckeye Manf. Co., Cincinnati, has placed additional machinery in the cannery, 
as per bill of Aug. 27, $2568.90 which is paid with Voucher Check. 

vG»n the authority of the Directors, our bank balance has been increased by the deposit 
of the company’s 63 day note of $5,000, the bank crediting our account for that amount, less 
63 day’s discount (interest) at 8 per cent. (Debit Cash for face of note and credit Cash for 
discount. ) 

VA. F. Hanlon has purchased 30 Shares of Treasury Stock at 5 per cent premium, pay- 
ing for the same by transferring to the Company H. A. Ellison’s note (secured by mortgage) 
for $2500 and cash for balance. 

yWe have sold to A. B. McCall, proprietor of the LaClede Hotel, Evanston, Ind., at list 
prices net, 20 Cs. each of our Stan. Pears, Cher., Corn, and Peas. He is to remit cash 
when goods are received. 

v^nie Ohio Coal Co., Vernon, O., have delivered three cars of Hocking Valley coal, 
46400, 47500 and 46100 lbs., at $1.25 per Ton as per bill of Aug. 26. Terms, Cash! 
Voucher Check. 

H. Bannon & Co., Syracuse, O., order at list terms 75 Cs. Perf. Tomat., 60 Cs. B. 
Bk. Be^ns; 45 Cs. Perf. Peas; and 50 Boxes Dia. Peach. 

\Fayerweather & Ladew, Chicago, send us bill dated Aug. 20 $167.50, for machinery 
belting, that has been duly received and accepted. Terms 5-30 n-60. 

vA. B. Holloway of Columbus, Ohio, has failed and we have accepted a cash settlement 
of his account at 50 cents on the dollar, the receiver sending us N. Y. dft. for the amount. 

Note— Since the Sales Ledger Account will be credited from the Journal, make no entry of this payment 
in the Sales Ledger column of the Cash Book. 

A. Gregory & Co. have ordered at list terms 125 boxes Dia. Ap. ; 175 Bx. Orch. 
Peach and 250 Cs. each of Perf. Peach, and Tomat. 

•'vWilson & Gray’s bill for desk and chairs for use in the office, $16.25, has been paid out 
of Petty Expense Fund. 

vJ^M- Barnes has purchased 20 Shares of Treasury Stock at 5 per cent premium, pay- 
ing for/the same with his 30 day note. 

vWe have sold to W. B. Hoyt Co., Chicago, the following wholesale order at prices 
given; F. O. B., Hillsdale; 500 Cs. Perf. Corn @ 90c; 500 Cs. Perf. Tomat. @ 85c; 400 
dQs. B. Bk. Beans @ 95c; 300 Cs. Perf. Peas @ $1.25; 200 Bx. Dia. Peach, at 8c per lb.; 
they are to settle on receipt of the goods, with three acceptances of $500 each, at 30, 60, 
and 90 days respectively, and cash for balance. 

Moody presents foreman’s receipts for raw products purchased and delivered as fol- 
lows- Cannery $1132.40; Drier $528.75. 

vTraveling salesmen’s expense bills for the week, which are paid as usual, J. A. Martin, 
$47.50; Chas. Baker, $61.15. 

vAhe pay roll for the week, is as follows: Cannery $2387.50. Drier $951.1 5. 

The B. & O. Ry. freight bill as follows : — 

Sugar Refining Co., Cincinnati, 50 bbls. Sugar for Miscellaneous Dept, of the 
Cannery, $26.50; Buckeye Machine Co., machinery, etc., $39.40; Ohio Coal Co., 3 cars coal 


$67. 90/Fayer weather & Ladew, belting, etc., $13.50. 
XFhe weekly salarie 


salaries are paid ; amounts the same as last week. 

Post the week’s business and take off trial balance. If correct, proceed with the next 
week’s business as follows : — 


«2 


CORPORATION AND VOUCHER ACCOUNTING. 


Memoranda for Weefe Ending Sept. 7. 

kWe have remitted to C. H. Webster & Co. our check with Voucher No. 26. 

\^ e have purchased of the Ohio Lumber Co., Cleveland, O., for Drier Casing Dept, per 
bill of Sept. 2, 17 M. ft. spruce lumber @ $11.65. Terms 60 days, 5 per cent off if paid in 
30 days. 

\/Benson, McGuire & Co. remit N. V. dft. for old machinery, etc., sold them Aug. 24. 
>A. T. Melville & Co. have ordered fit list terms, 75 Bx. Dia. Ap. and 50 Cs. each of 
Perf. Peach., Pears, and Cher. 

yC. A. Gregory & Co. report that in our last shipment to them, 8 boxes of “Orchard” 
Apples were sent instead of the “Diamond” brand. We send them a memorandum of credit 
for the/amount of the discrepancy. 

yWe have remitted to the Chicago Tinning Co. cash to balance account, also to cover 
amount of Voucher No. 31 less allowed discount. (Two Cash Book entries). 

Note — The discount period for the account expired on Sept. 5, but it will be assumed that the remit- 
tance was made in time to save the discount. 

v 4 B. McCall remits check for his purchase of Aug. 31. 

V id'arvin & Wright, Cincinnati, order at list terms; 125 Bx. Dia. Peach, and 150 Cs. 
Perf. Tomat. 

pRLC. Noble & Co. of Sharon, Ind., have recovered their financial standing and have ar- 
ranged to pay in full all their accounts settled under the receivership. They have sent us a 
check fop the portion of their account that was charged to Loss and Gain. 

tWp^have handed B. F. Sloan our check for rent of Warehouse to Oct. 1, $75. 
v^tlie W. B. Hoyt Co. of Chicago have remitted us a N. Y. dft. for that part of our bill of 
Aug. 31 that was to be paid in cash, also the three acceptances, of $500 each, 30, 60, and 90 
days. •/ 

G?ne Union Label Co. of Cincinnati, have delivered an assortment of labels for canned 
goods and their bill for the same at 30 days, dated Sept. 2, for $124.40. (Charge C. G. 
Casing, Dept. ) 

v/The Kalamazoo Asylum has remitted voucher with check for their order of Aug. 24. 
y^$LRice & Co., Louisville, Ky., order at list terms 75 Cs. each of Stan. Peach., Pears, 
Cher., and Corn. With the order, they remit N. Y. dft. for their purchase of Aug. 10. 

\JfZmes Douglas has sold all his remaining stock to Geo. P. Morton and A. F. Hanlon, 
Mr. Morton taking 50 shares and Mr. Hanlon the remainder. Mr. Douglas first surrenders 
—the shares at present standing to his credit, taking two other certificates for the required 
amounts which he transfers to Messrs. Morton and Hanlon. Issue the required certificates, 
cancelling those surrendered; make the necessary entries in the Stockholders’ Ledger and 
close up" Mr. Douglas’s account in this book. 

\gLH. Bannon & Co. remit cash for their purchase of Aug. 10, less allowed discount. 

'We remit to Ohio Lumber Co. cash to balance account. 

v/Stpart & Hall remit cash for their purchase of Aug. 10, less allowed discounts. 

^Hie Graham Gro. Co. send a trial order for 40 Cases each of our Blk., Rasp., Straw., 
and Cr. Ap. Jelly. We allow a special discount- of 5 per cfent from list prices, and bill goods 
at 30 dpys. - 

AVe remit Voucher Check No. 43 to Union Spice Co., Philadelphia, for amount of their 
bill of Aug. 7, less allowed discount. 

yp A. Martin sends weekly expense bill amounting to $53.50 and requests a Remittance 
of $2 5, on salary account, which request is complied with. 

A called meeting of the stockholders was held at the Company office on Sept. 6, and 
was attended by stockholders representing a majority of the stock. At this meeting the fol- 
lowing business was transacted 

jC. Minutes of previous meeting read and approved. 

J2. The Secretary read the resignation of James Douglas as Treasurer of the Company. 
Motion carried to accept and place on file. 

y 3 . Mr. Chas. T. Fenton was elected Treasurer to fill out Mr. Douglas’s unexpired term. 
J 4. Mr. Martin offered a resolution that the Secretary be instructed to withdraw from 


MEMORANDA FOR SEPT. 7 AND 14. 


63 


sale and retire that portion of the Treasury Stock that was still unsold. Considerable op- 
position to the proposed measure was developed, and a vote by shares was demanded. The 
Secretary prepared a list of the stockholders voting, with the number of votes to which each 
was entitled as follows : — 

v/ Iti favor of the resolution : 

A. F. Hanlon Shares 

Geo. P. Morton “ 

Student “ 

Arthur Moore “ 



the resolution : 
L. M. Barnes 
E. P. Moody 
A. W. Nelson 
H. T. Bell . . . 
A. B. Hillis . . 


Shares 

a 

tt 

a 

(C 


The chair declared the resolution adopted. 

'5. On motion it was resolved to declare a second Cash Dividend of five per cent, to 
be payable on Sept. 14, provided, the same should be justified by the results of the month’s 
business. 

y6. Mr. Chas. A. Townsend, a gentleman engaged in promoting the formation of the 
American Food Supply Company, was then introduced and addressed the meeting. Mr. 
Townsend explained that a number of leading canneries had been consolidated into a new 
corporation, the American Food Supply Co., located at Cleveland, O., and that his present 
mission at Hillsdale, was to induce the stockholders of the Central Canning and Drying Co. 
to join the combination. He then offered many arguments and illustrations to show the 
various advantages of such a course. After a quite general discussion of the proposed con- 
solidation scheme, the matter was, on motion, referred to a committee consisting of Directors 
Hanlon, Morton and Moore, who were instructed to investigate the whole proposition fully 
and make a report at a special meeting of the stockholders to be called for the purpose on 
Saturday, Sept. 14, at the Company’s office at 8 o’clock p. m., due notice of which should 
be sent by the Secretary, to each stockholder. Meeting adjourned. 

vAVrite up the minutes, including a correct record of the vote on retiring the Treasury 
Stock, after which make the necessary Journal entry for retiring the unsold stock. See 
page 22. 

vPrepare a written notice as required for mailing to the stockholders, and submit the same 
to your teacher. 

''Mr. Moody turns in foremen’s receipts for raw products purchased for the week. Can- 
nery, $942.65; Drier, $497.60. 

yfme B. & O. Ry. presents freight bills as follows : — 

Ohio Lumber Co., Cleveland O., car load lumber $21.50 

Union Label Co., Cincinnati, box of labels 2.75 


ly as usual and charge to proper accounts, 
fe pay P. Harrington’s dravage bill to date, $71.40. 
v/he weekly pay roll is as follows : — 
vCannery, $2297.20; Drier, $1021.15. 
v Pay office salaries for same amounts as last -week. 
Post the books and submit trial balance as usual. 


s/fz have remitted to Cedar Cr. Mill Co. Voucher Check No. 41 for theirbill of Aug. 
vPne Eagle Canning Co. hand us cash to balance account. 

*Fhe foreman of the Drier presents a charge ticket for 7*4 M ft. boxing lumber 
$13.50, transferred to the Cannery. 


Memoranda for WeeK Ending Sept. 14. 


64 


CORPORATION AND VOUCHER ACCOUNTING. 


VJnrough Mr. C. M. Fairchild, agent of Angell & French, Cleveland, O., we have sold to 
that firm at cash terms the following goods delivered at the Cannery at the prices given : — 
1000 Cases Perf. Tomat. @ 8 y l / 2 c; 500 Cs. Perf. Peas @ $1.25; 250 Cs. Perf. Gr. 
Beansto $1.10; 250 Bx. Dia. Ap. at 6 %c per lb; and 250 Bx. Dia. Peach, at 8j£c per lb. 

^(tr. Fairchild hands us a check for $3000 to apply on the order, the remainder to be paid 
when the goods are received and the invoice verified by the buyers. 

\®ur hanker has notified us that the personal check given by A. B. McCall of Evanston, 
Ind., for his purchase of Aug. 31, and which was deposited Sept. 7, has been refused by the 
Drovers’ Bank of Evanston, the bank upon which it was drawn. The reason given for dis- 
honor, was that Mr. McCall had no funds to his credit when the check was presented. The 
check has been protested, the fees being $1.75. 

\/We hand our bank a check for the amount of the protested check plus the fees, and credit 
Cash for the whole amount, charging “Protested Paper.” 

Note— Cases of this kind are quite frequent among concerns that do much business by mail. To carry 
an account with “Protested Paper” is usually more convenient than to recharge the amount to the delinquent 
customer’s account. If after the customer is notified of the returned protested paper, he should make a re- 
mittance for the amount, cash is debited and “Protested Paper” is credited. This disposal of the transaction 
obviates the inconvenience of making entries affecting the Sales Ledger accounts. When the books are 
closed, the balance of the Protested Paper account stands, as a resource, but if there are items on it that 
represent undoubted losses to the business, these may be segregated, and their amount closed into Loss and 
Gain. Protested notes may be carried to this account in the same way. Many firms deposit their customers’ 
notes with their bankers, the bank crediting them as in the case of cash deposits. In this case, should the 
note be dishonored and protested. Cash is credited and “Protested Paper” debited when the note is returned, 
the same^as in the case of a protested check. 




The Graham Grocery Co. remit Chicago dft. for our bill of Aug. 17, less Mem. of Credit 
and allowed discount. 

VC. A. Gregory & Co. have settled their account by giving us their acceptance at 30 days 
for the amount of our bills for Aug. 17 and 31, less allowed discount and credits. (Deduct 
MenTof Credit on dried fruit before computing discount.) 

v/E. P. Moody’s note of Aug. 10, given as payment of Installment No. 3, is paid in full, 
in casb/with the interest due to date. 

^Ve have taken out an insurance policy with the National Fire Ins. Co. on goods stored 
in warehouse, the premium on which amounts to $11.25, and which we have paid in cash. 

v/We have sold to M. C. Anderson at 30 days, refuse products of the Cannery, $74.90, 
and op the Drier, $47.25. 

\/S. C. Joy, Steward of Hartwell College, remits his check in payment of our bill of Aug. 
24, and sends another order for 10 Cs. each of our entire line of Jellies, 20 Cs. B. Bk. Beans, 
and 25 Cs. Perf. Corn. We charge 20 cents in advance of list prices. Terms, Cash. We 
prepav/freight charges in cash, $7.20. 

vA, T. Melville & Co. remit cash in payment of our bill of Aug. 17. 

vA. Monroe & Co. balance their account by handing us their 30 day note bearing interest 
at 8 percent. 

We send Voucher Check No. 55 to A. C. Marmaduke & Co. for amount of their bill, 
less discount. 

V/A special sale of our goods, delivered at the Cannery, has been made to Dalton, 
Springer & Allen, 187-195 Wells St., Chicago, as follows: — , 

1750 Cs. Stan. Corn @ 60c. 

945 Cs. Stan. Tomatoes @ 55c. 

5po Boxes Orch. Peach, at 6j^c per lb. Terms, net Cash. 

pThe Hillsdale Fuel Supply Co., Hillsdale, O., have delivered at the Cannery 75 Tons 
. coal @ $2.15, per bill of Sept. 12. Terms 30 days. 

g . Ellison’s note for $2500 dated July 28, in favor C. T. Hanlon and transferred to 
iny, has been paid in full with interest at 6 per cent from date. 

Martin has sold all his Canning Co. Stock to Arthur Moore. Make /the necessary 

transfers. 

✓ 0 . C. Oliver & Co. remit Cash to balance their account less allowed discounts. 

^has. Baker reports expense bill for previous two weeks $72.50, and J. A. Martin for 
one week $52.70. 


MEMORANDA FOR SEPT. 14. 


65 


V(£n I 


Ir. Moody, the buyer, presents foremen’s receipts for raw products purchased for the 
week a^ follows : Cannery, $1643.85 ; Drier, $791.20. 

vTpe weekly Pay Roll is as follows: Cannery, $2187.50; Drier, $1129.76. 

vfO Harrington presents drayage bill to date, $26.95. 

Vt he usual weekly salaries are paid. 

\Jpr A. Martin and Chas. Baker are each credited with one month’s salary, and checks are 
sent them for such sums as will balance their accounts. 

vWe have deposited at the bank C. A. Gregory & Co.’s acceptance of this date, the same 
being placed to our credit less J 4 of one per cent discount from face. (Two entries in Cash 
Book as in the case of the Company’s note deposited Aug. 31). 

VA. B. McCall of Evanston, Ind., has written a satisfactory explanation regarding the 
protesting of his check, and stating that he will in a few days send draft for the amount, 
plus the protest fees. t 

CFhe purchasing agent of Dalton, Springer & Allen has handed us a check for the amount 
of tneir recent purchase. 

You will now proceed to the second general closing of the books, carrying out the fol- 
lowing directions, in the order given :— 

1. Post the books to date and prepare a trial balance which you will submit to your 
teacher for approval. 

■ 2. Prepare a schedule showing the balances of the several accounts in the Sales Ledger. 
Compare the total of these with the balance of the Sales Ledger Account. 

3. Prepare a statement of the business for the period commencing August 17, and 
ending September 14, following the general form of your statement for August 17, and as- 
suming the following Inventories :— 

Note— In preparing this statement, be very careful to make the right disposal of the inventories of the In- 
terest Account. The General Expense Account must also be credited on the statement with the inventory of 
unexpired rent and insurance. 

Inventories for Closing Sept. 14. 




Plant (Inventory at cost) 

158410 




Canned Goods 

34598 

60 



“ “ Raw Prod. 

287 

50 

*’ 


“ “ Casings 

291 

75 



“ “ Miscel. 

564 

20 



Dried Fruits 

6975 

60 



“ Raw Prod. 

328 

10 



“ “ Casings 

125 




Fuel 

160 




Interest Receivable 

76 

40 



Interest Payable 

116 

25 



General Expense (unexpired rent and insurance) 

95 




Petty Expense (as per P. Exp. Book) 




3 .. 0 ,3— 


7 4 




7 0 


4. When your statement is prepared, submit it for approval. 

5. After entering the inventories in the several accounts, close the Ledger by Journal 
entries as in your last closing. ■ 

6. Close and rule up the Cash Book and all accounts in the General Ledger that are in 
balance, forwarding all inventories. 

7. Make the necessary entries in the Journal . and Cash Book and Dividend Book for 
declaring a cash dividend (Dividend No. 2) of 5 per cent of the issued stock. Post these 
entries and rule up the accounts that are in balance. 

Note — As the dividend called for is greater than the amount of the net gain, the excess must be drawn 
from the surplus account. 

The following form of entry is required : — 

Loss and Gain 4 

Surplus ________ 

Dividend No. 2 

A called meeting of the stockholders to consider the advisability of effecting a sale of ' 
the business to the American Food Supply Co., was held on Sept. 14, 1901. 


66 


CORPORATION AND VOUCHER ACCOUNTING. 


^ 

The advisory committee, reported favorably upon the acceptance of the following propo- 
sitions, which have been formally submitted by representatives of the American Food Sup- 
ply Co. 

1. That the C. C. & D. Co. convey through bill of sale and deed, to the A. F. S. Co. all 
the real estate, plant, machinery, stock and other property, also, all accounts, cash, bills and 
other assets, as shown by the financial statement for September 14, less the amount of net 
gains to date which are to be distributed in, Cash among the several stockholders, before the 
transfer is made. 

2. The A. F. S. Co. are to assume the payment of all accounts, notes, acceptances, 01- 
other liabilities of the C. C. & D. Co., as shown by the books on this date. 

3. In consideration of this sale and transfer of their business, and of the surrender of 
the C. C. & D. stock at present held by them, the stockholders of the C. C. & D. Co. are to re- 
ceive the amount of $276,000, in paid up stock of the A. F. S. Co.,, which is an increase of 
twenty per cent over the present amount of issued stock of the C. C. & D. Co. Said stock 
is to be distributed among the stockholders of the C. C. & D. Co. in proportion to their 
present holdings of stock as shown by the Company books. 

4. Upon the acceptance of this proposition, and the formal and legal transfer of the 
property in accordance with the terms stated, the representatives of the A. F. S. Co. are to 
assume immediate control and management of the business and property of the C. C. & D. 
Co. 

After a full discussion of the propositions submitted, it was unanimously decided to ac- 
cept them, and the officers of the company were, on motion, authorized to have the necessary 
legal papers prepared for effecting the sale in accordance with the terms of the propositions 
ps submitted. 

The Secretary reported that after paying Dividend No. 2, there was a balance in the 
Surplus Fund of about eighty-seven dollars, that was still undistributed, and he invited sug- 
gestions from the stockholders present as to the best means of disposing of it. Mr. Martin 
called attention to the worthy work and purposes of the Canners’ Benefit Association, an or- 
ganization that had lately been formed among the employees of the Company, and he moved 
that the balance of the Surplus Account, referred to, be donated in cash to this organization. 
The motion was adopted by unanimous vote. 

The meeting then adjourned. 

The books are now to be finally closed and the corporation dissolved through the trans- 
fer of its interests and the surrender of stock by the stockholders. To accomplish this, pro- 
ceed as follows : — 

1. Make a credit entry in the Cash Book for the balance of the Surplus Account, to 
be donated to the “Canners’ Benefit Association;” when this entry is posted, the Surplus 
Account will, of course, be in balance. 

2. Balance and rule up the Cash Book, and bring down the balance of cash on hand. 

3. Make Journal entries as follows, for the double purpose of setting forth the facts as 
to the sale of the business to the American Food Supply Co., and to effect the closing of the 
books, upon the dissolution of the Central Canning and Drying Co. : — 

Note — The items of these entries, are with the exception of the cash balance, the same as those given in 
the last statement, and should be taken from it. As the Surplus Account is closed, its balance is omitted. 

(a) Make a Journal entry, charging the American Food Supply Co. with the entire 
resources of the business as shown by the balances of the several resource accounts, and 
crediting these accounts with their several balances. In the explanation for this entry, state 
the terms and conditions of the sale, by which the business of the Central Canning & Drying 
Co. is to be terminated. 

(b) Make a Journal entry, crediting the American Food Supply Co. with the total of 
the liabilities, and debit the liability accounts with their several balances. Explain that, by 
the terms of the sale, these liabilities are to be assumed by the American Food Supply Co. 

5. Post these entries, after which the Cash Book and the accounts of the General 
Ledger being in balance, are closed and ruled up. 

Note — Add each side of the several accounts, before ruling them up, to see that no error has been 
made in transferring the amounts. 


CONCLUDING SUGGESTIONS. 


67 


6. Assuming that all stock has been surrendered, write the word “Surrendered” in red 
ink across the face of each certificate in the Stock Certificate envelope, and re-attach the sev- 
eral certificates to their original stubs, then debit each account in the Stockholders’ Ledger 
with the amount of surrendered stock and rule up the several accounts. 

Concluding Suggestions. 

The act of selling out the property, good will, etc., of the business, and the formal 
surrender of the stock, effects the dissolution of the corporation, although, it does not destroy 
the individual liability of the several incorporators for the company debts and obligations, 
should the American Food Supply Co. default in its discharge of the same. 

In most states, the laws prescribe the manner in which a corporation may be legally dis- 
solved, and when such a step is contemplated, it is necessary to proceed in accordance with 
these laws. 

At this point, it is well to admonish the student that in all matters affecting the legal 
status of a corporation, it is the well-established custom for the parties interested to proceed 
only in accordance with the advice and co-operation of a competent attorney. To him is as- 
signed the task of preparing the various legal documents required, as the necessity for hav- 
ing these made out in proper legal form is a matter of too much importance to be left to in- 
experienced hands. 

It is also well for the student to perceive that the consolidation of several corporations 
by a bona Me sale, is a very different affair, from the formation of a “combine” or “trust,” 
in which the several combining corporations continue to maintain their corporate existence, 
although operated as a single concern. The first method is entirely lawful, and does not 
differ materially from those business consolidations among individuals or partnerships, in 
which one man, or firm, buys out, or forms lawful partnerships with the others. The sec- 
ond method of combination, however, is now contrary, not only to the laws of the United 
States, but to those of most of the several states, and in point of fact, the “trust,” as an il- 
legal combination to control trade, has practically gone out of existence. 

When one company sells out to another, as in the case of the Central Canning & Drying 
Co., the change of management may, however, be merely nominal, the same men' may, as 
employees of the new company, continue to direct the affairs of the business, as before, and 
there might not be, and probably would not be, any noticeable change in the ordinary rou- 
tine of the company affairs. Very likely, the same operating books would continue to be 
used, but the bookkeeper would, of course, have nothing to do with the general corporation 
affairs, which would be administered at the central office of the purchasing company. 

Sometimes, also, the financial management of the business is conducted at the central 
office, the local establishment concerning itself only with the business of manufacture. 

And now, at the conclusion of his work, it may be well again to remind the student that 
the methods of corporation and manufacturing business and accounting, as presented in this 
course, are by no means assumed to be the only, or even the best ones that might be em- 
ployed. Probably no two business concerns would conduct their affairs or keep their books 
in quite the same way. 

Accountants in these establishments learn, by trial and experience, what forms of books 
and what accounting devices are best suited to the special conditions of the business. 

It is believed, however, that the present course, if the student has performed his work 
faithfully, will have made him fairly familiar with the more important of the principles and 
methods that would be likely to be employed under the conditions given, and that this knowl- 
edge may prove of the greatest service to- him, should he ever engage in commercial pursuits. 


t 


INDEX 


Articles of Incorporation 2 

Form of 10, 11 

Assessments, Definition of 3 

Levying and Collecting 7, 8 

Notices of 8 

Assessment Book 7 

Form of 17 

Bill, Form of 37 

Bonds 4 

By-Laws, Should Include What 48 

Bonus, Definition of 4 


Cash Book, Special Column, Description and 

Form of 38, 

Central Canning and Drying Company, Organiza- 
tion of 29, 

Charter, Definition of 

Closing Entries 

Closing Ledger Accounts 

Closing the Books, Instructions for 

Close Corporations 

Commercial Travelers’ Expense Bills 

Corporations 

Books Required for the Organization of 5, 

Classification of 

Dissolution of 

Exercises in Journal and Cash Book En- 
tries 25, 

Finances 

Liabilities of 

Opening Books of, Under Various Condi- 
tions ig t 

Powers and Liabilities of 2, 

Procedure in the Organization of 

Corporation Accountancy 


39 

30 

1 

58 

58 

55 

5 
47 
1-8 

6 

1 

66 

26 

3 

3 

24 

3 

1 

5 


Dividends, Definition of 3 

Declaring and Distributing. 8 

Dividend Book, Form of 17 

Donated Stock, Disposal of and Entries Required.. 24 
Double Liability Corporations 3 

Earnings 4 

Franchise, Definition of 4 

Franchise Account 20 

Funds, Definition of 4 

Glendale Creamery Company, Memoranda of Trans- 
actions Q.jg 

Glendale Creamery Company, Entries for 18, 19 

Interest Account, Inventories and Gains of 55 

Installment Book, Form of X3 

Installments, Definition of 3 


Installment Certificates, Transfer of PA ° E 7 

Form of j' 

Installment Certificate Book .■ g 

Installment Ledger, Description of g 

Form of 


Journal, Six Column, Form of. 
Limited Corporations 


33 


Minute Book, Example of 

Minutes of Corporation Meetings 

Model Trial Balance and Statement .56, 

Open Corporations 

Operating Books ....... ’ ” 

Petty Expense Book, Description and Form oL. 

Promotion 

Protested Paper, Disposal of ■ ■ ■ . . . 

Quotation Lists 


Raw Products, Purchase of in Canning Business 

Recording Sales of Merchandise 

Review Quiz 7. 27 

Sales Journal, Description and Form of 36 

Sales of Merchandise, Procedure, Etc 7.7. . ’ 

Single Liability Corporations 

Six Column Journal, Description and form of. 7 77 

Stock, Definition of ' ' ’ ’ 

Classification of ' " ’ 

Transfer of 6 

Stock Certificates.; 6 

Transfer of ‘ ’ 

Stockholders, Liabilities of 

Stockholders’ Ledger g 

Stock Subscription Agreement 7.2, 9’ 

Subscription Account, Entries for 7. 18/23) 

Terms of Sale 

Time Book, Description and Form of 

Treasury Stock, Definition of 

Journal Entry for 

Sale of, at a Premium or Discount 

Retirement of 

Trusts, Distinguished from Corporations 

Voucher System 

Voucher, Form of 

Disposal of .. 

Voucher Check, Form and Description of .52, 

Voucher Payable Register, Form and Description 


of. 


Voting and Elections 

Unlimited Liability Corporations. 


•34, 


9 

2 

57 

5 

5 

39 
1 

64 

36 

44 

36 
28 

37 

38 

3 

36 

1 

4 
7 

15 
7 

3 

16 
to 
24 

36 

40 

4 
19 

19 

.22 

67 

31 

32 
35 
53 

35 

3 



\ 1 














































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